Customized Process

  • I customize the engagement for each client (as against the standardized approach which is more common in India)

Approach

  • My approach is relatively risk averse and conservative, and focuses on simplicity, minimizing costs and minimizing mistakes
  • Some examples of this approach are provided below:
    • Risk averse: All of us tend to overestimate our ability to stay calm during a significant stock market crash (relevant article in Mint). Ironically, the primary way to mitigate this is to accept that it will be difficult to stay calm in such a scenario. As a result, one should limit one’s equity allocation to twice the amount that one is willing to permanently lose
    • Conservative: The average investment returns on one's overall net worth over one's lifetime, is much lower than most people estimate. Because of this, saving an appropriate amount each month (and year) becomes as important as investing
    • Simplicity: The entire core of the retirement planning calculation should be simple enough to do on the back of an envelope 
    • Minimizing costs: For the equity component of a portfolio, I like to own the NSE NIFTY 50 index through a low-cost index fund / ETF (relevant article). This is similar to Warren Buffett’s advice
    • Minimizing mistakes: Not sufficiently diversifying one’s portfolio (between safe investments vs risky investments such as equity & real estate) is the most common mistake that one should avoid

Decisions

  • My role would be to advise the client and occasionally, where critical, to try and convince a client
  • While there could be some iterations, and discussions about the recommendations, the client will take the final decision about which of my recommendations they will accept and implement

Implementation

  • The client will be responsible for implementing the Financial Plan. Typically, this can be done online
  • I will try to guide the client through the implementation of the Financial Plan, but I will not have any direct or indirect control over the client's investments

Logistics of the Process

  • The primary mode of discussion would be over pre-scheduled audio / video calls
  • The secondary mode of discussion would be over email

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