Guided portfolio service helps investors

It is a known fact that creating a portfolio isn’t easy. You have to conduct a thorough research and select the best options that match your investment goals.

But most investors in the country do not have the time or money to monitor the market 24x7. So does this mean it is impossible to create a good portfolio?

Not necessarily. First, you can rely on mutual funds to do most of your ground work. Then, you can opt for ‘guided portfolio services’ that help investors create and manage their portfolios for little or no cost at all.

You just need to open an online account to enjoy the benefit of professional advice that is personalised for you. Now you don’t need to worry about hefty consultant fees anymore.
But before you start, there are a few questions you need to ask yourself.

Firstly, what kind of an investor are you?

You can find people who dabble in different avenues such as shares, mutual funds, government bonds and so on. However, they can be broadly classified into three different groups:

 *Investors who prefer low risk
 *Investors who prefer to invest in markets and are ready to take a moderate level of risk
 *Investors who prefer taking substantial risk, provided the returns are high.

Guided portfolio caters to all the three types of investors by creating tailor-made portfolios.

Secondly, Debt or Equity Funds?

There are thousands of schemes to choose from: short-term funds, long-term funds, mid-cap funds, large-cap funds and advantage funds etc. But the number of funds that can be incorporated in a portfolio is always limited. Hence, it is important to choose funds that offer the maximum returns possible.

Before choosing a specific scheme, you must know your investment goals whether it is long-term growth or short-term capital protection?

Based on your answers, you may tend to invest in either debt funds or equity funds. In most time horizons greater than one year, equity funds tend to outperform debt funds, as per performance reports by Crisil.

However, equity funds also display greater fluctuations in price movement. Meaning, they offer higher returns but are riskier.

For example, the three-year average return on debt funds like dynamic bonds, and medium- and long-term gilt funds has been 11.32% and 12.89%, respectively. In comparison, the return on multi-cap equity funds was 16.34%.

So, the best option is to create a balanced portfolio with a mix of both debt and equity funds.

Take advantage of Robo advisory

However, a good advisor is not easy to come by—especially at a low price. This is where Robo advisory can play a big role.

Simply put, a Robo advisor is an online recommendation service that uses algorithms to pick and choose the best investment options.

A simple example of Robo advisory is Guided Portfolio service that forms a portfolio for you after asking three to four simple questions.

Then, it offers financial advice that best suits your requirements. The best part is, there is little or no human intervention in the entire process. It, thus, eliminates all biases that human advisors could be exposed to.

And it has taken the mutual fund world by storm considering that the advantages are simply too many.

 It is accessible to anyone who wants advice on financial planning.  The fees are extremely low. In most cases, including  Guided Portfolio service, it is completely free of cost and so there’s no worry about high fees that experts charge.

 It’s DIY-friendly. Meaning, you can Do It Yourself. You do not have to rely or communicate with a set of experts to invest your money.

 A Robo advisory is systematic in nature. It reviews your fund regularly and offers automatic suggestions. Further, you do not have to worry about balancing your portfolio as recommendations keep this balance in mind.

So the amount of time and effort required in research and calculations are next to none. When you select the guided portfolio services, you can be assured that it is in the best of hands.

And last, you have two options: tell the amount you wish to invest on a per month basis, or give your financial target.

Then, with a little more information regarding your age and risk profile that takes a few seconds, you get an entire portfolio built entirely for your needs.

All you need to do next is buy the MFs and meet your goals. That’s how simple your life gets with the Guided Portfolio service.

(The writer is Head – Personal Wealth Advisory at Edelweiss Broking)