It doesn’t matter how much you earn. Over time, the value of money depreciates. To avoid that depreciation, everyone should allocate some part of their finances for investing in stocks, bonds, and mutual funds. If you do not have much experience in the stock market or do not want to spend much time on analysis, don’t worry. We’ve got you covered. In this article, we discuss ready-made portfolios that can make your investments easier. But, before we begin, let us learn about a risk profile and thematic investing.
What is a Risk Profile?
In simple terms, a risk profile is nothing but an evaluation of a person’s willingness to take risks. A person who wants to beat the index will invest in direct equities. Here, the risk profile of this individual is aggressive. On the other hand, if a person is more concerned about saving capital, this type of investor is called a conservative investor. Basically, conservative investors allocate a large part of their portfolios for safer investments like quality bonds and give less preference to equity. There is another type of investor that lies between conservative and aggressive investors—called a moderate investor. This particular kind of investor balances his or her portfolio between risky and safer class assets.
What are Ready-Made Portfolios?
Ready-made portfolios are combinations of investments that are grouped into one fund. Each of these funds is created by the asset management companies, which spend a lot of time building them. These portfolios invest in a different mix of assets across different sectors. In this way, they build ready-made portfolios in a well-diversified manner. Because of diversification, ready-made portfolios are risk-balanced. The main goal of these portfolios is good returns with less downside risk.
What is the Connection Between Thematic Investing and Ready-Made Portfolios?
Thematic investing is nothing but building a portfolio based on ideas. Suppose an investor feels that electric vehicles companies have the potential to offer good returns in the future. In this case, he will set up a portfolio that belongs to electric automobiles and start investing in it. On the other hand, ready-made portfolios are like playlists. Fund managers build different kinds of portfolios. The only task of the investor is to start investing in the one he likes. There is no need to pick every stock manually.
How are Ready-Made Portfolios Built?
These portfolios are built on investment strategies or ideas, or themes. Fund managers use fundamental, technical and quant research-based analyses to build these portfolios. Ready-made portfolios are thoughtfully crafted and well-managed fund managers. If you want to invest in one of such portfolios, click this link to explore thematic boxes.
Ready-made portfolios were built to make investing easy. These portfolios offer long-term investments, thematic funds, ETFs, actively managed index funds.
Who Needs a Ready-Made Portfolio?
- Many beginners want to invest in the stock market but do not know where to start. Knowing where to start is the hardest part. Ready-made portfolios are best for these kinds of people. If you are a beginner, you can opt for a ready-made portfolio.
- These portfolios are suitable for those who do not have much time to maintain their portfolios.
- If you want a mixed diversified portfolio, you must start investing in these portfolios.
- If you want your portfolios maintained by a team of professionals, then you can choose a ready-made portfolio.
Click this link to explore the ready-made portfolios.
Benefits of Ready-Made Portfolios
- Value for money
Imagine a situation where you need to build your portfolio with all the risk-balanced components. It is time-consuming. Not only that, during the portfolio building, you need to pay extra charges and taxes whenever an investment is made. But for ready-made portfolios, that is not the case. Since it is already built by a team of professionals and contains all kinds of balance investments, just buying this one fund is enough. The type of charges will also be less when compared to manual investments. The ready-made portfolio is considered among the cost-effective and value for money products.
- Offers freedom to select
Based on the risk profile, investors can select the ready-made portfolio suitable for them. AMC companies build different kinds of portfolios for all kinds of investors. If you are a risk-averse investor, you can select a fund that has bonds or gold as a major component. On the other hand, if you are ready to take the risk for higher returns, then considering the fund that has equity as a major component is a better option. In this way, ready-made portfolios offer different options to select the portfolio based on investors’ choice.
- Built and maintained by professionals
Ready-made portfolios are built and maintained by professionals. Since they are maintained by professionals, you do not need to worry too much about the portfolio. They constantly review the portfolio to check whether it is performing up to the mark or not. If they find any issues, necessary modifications will be done to that portfolio. Even if it is managed by professionals, it is always a good idea to check your portfolio once in a while.
- Investing made it even easier
With ready-made portfolios, investors can easily select the fund they want and invest in it. Most financial websites offer risk metres, where investors can do their risk assessments. Most of the AMC offer funds that fall into three categories—growth, moderate and conservative. After assessments, they can choose the one based on their risk profile.
- Helps beginners to start investing
Ready-made portfolios are simple and easy to start. It can help millennials to start investing. Since these portfolios are maintained by professionals, it prevents beginners from improper balancing. Not only that, there are many areas where beginner investors can overlook, but with ready-made portfolios, there won’t be such issues.
- Habituates behavioural discipline
It doesn’t matter how smartly an investor picks stocks; without proper discipline, he/she cannot achieve his/her investment goals. Benjamin Graham said, “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go.” These portfolios can achieve both the financial plan and behavioural discipline.
Disadvantages of Ready-Made Portfolios
Ready-made portfolios are not built on a single-person basis. That means they are built keeping risk profiles in mind. Based on the risk profiles, different kinds of investors fall into different categories. In simple terms, we can say that these are designed as “one-size-fits-all” product with no scope of modifications.
Conclusion
Ready-made portfolios are easy to start and investment-ready. These are the best for beginner investors. They set a path to their investment journey. These portfolios are built based on keeping various risk profiles in mind. There will be portfolios for all types of investors, whether they may be conservative or aggressive. You can start investing in ready-made portfolios just by installing these apps on your android or iOS
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