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DIY Investment: Ways to Construct your own Portfolio

An investor education & awareness initiative.

Yes, there are multiple approaches for you to adopt that can help you build your own portfolio, but it depends on the time you have available and your interest in the financial markets, along with your understanding and ability to extract value from this knowledge. For those people who have all of these in abundance, it can be both fun and challenging while allowing you to retain control of your finances.

It is definitely possible to lay down general guidelines for investors who would like to try their hand at investing by themselves, without using the services of professional financial advisors. These days one can find a large amount of research reports and other details to understand the various investment options. If you are prepared to commit the time, there are real positives to getting involved in your own investing, namely – exercising control over your own money to achieve your desired outcomes and goals and of course, no need to pay fees and charges to anybody!

How to invest on your own account in mutual funds

If you are looking to invest in mutual funds without advice from an expert, these are some of the steps that you can aim to follow:

  • Create your financial plan taking into account your financial status.

  • Understand your investment risk profile. You can find many risk profiling tools online to help you do this.

  • Create your asset allocation pattern based on your risk profile and figure out how you need to invest to fulfill your financial goals.

  • Invest in mutual funds offered by a reputed mutual fund house based on all relevant factors.

  • Read all the information and materials about the fund house’s investment style and relevant terms and conditions.

  • Read all the information and materials about the fund house’s investment style and relevant terms and conditions.

  • Keep up to date with the main economic indicators so that you can decide the optimal time to move across asset classes (from equity to debt or vice versa).

  • Once you create a plan and start on the journey, stick to it.

  • Ensure that you monitor your investment portfolio regularly after deciding the frequency with which you should monitor your investments.

  • Ensure that you monitor your investment portfolio regularly after deciding the frequency with which you should monitor your investments.

If you are planning to build your own investment portfolio of stocks, shares, bonds or other investment products, here are some factors that you can consider:

  • Use a securities broker who does not charge excessive fees- there are many services available from leading banks and financial intermediaries online

  • Ensure that you hold all of your investments in the most tax efficient way.

  • Continue to monitor the major macro-economic indicators as well as the major global indices so that you can manage your risk.

  • Be familiar with the fundamentals of financial analysis and valuation such as price / earnings ratios, financial statements, and how earnings are reported.

When is DIY not a good idea?

In general, if you do not have the time or the inclination to pursue active management of your portfolio, investing on a DIY basis is not recommended. Also, some people avoid going to a financial advisor not because they don’t have the time or ability, but because they want to save up on the money they would need to spend due to the fees involved. This should never be the reason why professional financial advice is avoided. Think of when you fall sick or hurt yourself- would you not go the doctor only because it may cost some money?

A good financial advisor is not an expensive proposition at all, when you think of the long term benefits they can offer you. They can help you build a proper plan, spot suitable investment opportunities, monitor your investment portfolio and recommend changes when necessary to help you achieve all your financial goals. If you want to do it right but do not have the time or the energy available on a regular basis to plan and manage your investments, going for professional advice is simply a no- brainer.

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Key Takeaways

  • Creating your own financial plan and investment portfolio can be fun but it is challenging.
  • You need to dedicate quite a bit of time and effort to undertake research and monitor your plan and investment portfolio.
  • If you are not able to spend sufficient time on this activity, it’s best to use the services of a professional financial advisor.

Disclaimer: All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (‘RMF’). For more info on KYC, RMF & procedure to lodge/redress complaints, visit dspim.com/IEID. This is an investor education & awareness initiative by DSP Mutual Fund.