Should you keep your investments portfolio simple?
Investment is the buzz word today. Almost everyone with an above average income is looking for investment opportunities. Their reasons may differ but at the end of the day they are looking for the pot of gold at the end of the rainbow. These are the regular investors, and then we have the players.
The players are investors who are in the fray for bigger fish simply because the little fish is not challenging enough. Regular investments with fixed or steady incomes are not what they are looking for. They want complex scenarios to challenge their intellect. Normal is boring so they are always looking out for exclusive investment opportunity.
This brings me to what has been eating at me for some time now. There are many people who are always on the lookout for exclusive opportunities and investments that offer something different and obviously result in above average profits. These are players always on the lookout for something more exciting and exclusive. It is as if they truly believe that there is a product out there that is exclusive for them. Almost as if they are demanding exclusive lounge facilities at the airport.
Those on the lookout for such investments tend to find them too and it tickles their intellect to do something challenging and different from the crowd, but are these opportunities genuine or have they been created for those on the lookout?
Unfortunately such seemingly exclusive investment deals are not true opportunities, they have simply been created for investors on the lookout for exclusive deals. These exotic deals are manufactured to suit the complex taste of investors looking for intellectual challenge and exclusivity. These exclusive offers are written in impeccable complex English and on high quality paper to impress the prospective investor and are presented by people who are valued more for their oxford English rather than their financial literacy. Most of these products are structured in a complex manner and require PMS (portfolio management services). They have a large entry level ticket and are accompanied by complex portfolio reports that play more with words than with financial knowledge.
It might amuse you to know that big financial advisors and firms have made copious amounts of money over the years by simply pushing complex investment strategies, on to their gullible clients in return for high fees. Most of these do not stand a chance against the simple index funds and are yet sold to and bought by the players who hope to beat the market and make windfalls, they can brag about.
Over the years I have repeatedly stressed on keeping things simple. Simplicity is beauty. A simple product basket that you understand and can manipulate intelligently is a far better option compared to complex products that you struggle to understand. I do not deny the fact that complex investments can make money in short run but over the long run simplicity prevails. With Complex products, strategies need to be altered time and again which itself is painstaking for somone who is not involved in money matters on day to day basis. Remember, wealth is created by giving more time rather than quick returns. In
In nutshell, I recommend you to keep your product baskets simple, a simple portfolio will be easier to understand and manage. Also it will take you in the right direction in order to achieve maximum results.