I bet you have asked yourself these question many times over, what is the best thing I can do with my money? What is the best investment avenue available today? What is the best stock or mutual fund to buy? Quite rightly so these are valid questions and your everyday concern.

Like I have always said that financial management is a beautiful subject as there are always clear cut answers to your questions but this is provided you ask the right question in the first place. In the above questions you are basically asking what is the best product to buy? Now the above questions have many answers depending on who you are talking to. But suppose you were to ask, what is the best strategy for me? You can be sure you will receive probably no answer. That’s because most financial advisors are not trained and geared to answer this, they are trained on products. Their product manufacturers tell them that their product is the best and give them a story to prove this. The advisors believe so and hence act more as marketing men then real advisors. It is not their fault but you will have to wait while things change over time.

But there lies the dilemma; you cannot wait till times change! You have to act now. What should you do?

The Generic rule is to stop buying products, asking for product demonstrations & features. Look for strategy.

In the absence of strategy providing advisors you have no choice but to create your own strategy. How should you go about doing this?

Count all your money wherever you have it, whether bank or into some instruments. Wherever applicable take the current market value. The total you get is what you have.

Now I understand that you cannot make a strategic financial plan on your own however you can do the next best thing which is prepare a strategic investment plan in a manner geared to generate wealth over years. Thereafter whenever you get a Financial Plan done by qualified experts it would be a rearrangement of your investments towards your life’s financial goals – all goals viz., short term (less than 1 year), medium terms (1 to 4 years) and long term (4 years or more).

Here is a glimpse of what a strategic investment plan may look like. Naturally the strategy would depend and differ from one individual to another. Please note this is not a standard strategy. It is just an example.

1. About 5% of money as liquid cash in a bank account or fixed deposit as you prefer.
2. About 10% in bullion – gold, silver, platinum, palladium etc.
3. About 5% of money towards insurance premiums – any more is not a productive use of money
4. About 10% of money in fixed interest bearing instruments – the ones that gives you a real rate of return of atleast 3 to 4%. Real rate of return is the return actually earned minus the inflation rate.
5. About 55% of money into equity and equity related instruments both domestic and international
6. About 15% in alternative wealth instruments such as land & property – both domestic and international, precious stones, numismatics, art, collectibles etc. if you don’t want to follow this point 6 or don’t have enough to actually do this you can allocate this 15% to point 5 above.
7. This strategy above can produce a minimum rate of return of 12.25% p.a. over blocks of every 3-5 years. The beauty of this strategy is that almost 70 to 75% of your money is liquid or near liquid at any time. This gives you great flexibility to take advantage of prospective opportunities.

Did we forget something? Risk management is what you are perhaps thinking. In my view risk management today is presented and used by most advisors as a marketing concept more than a financial concept. Most people don’t understand risk and how it is to be managed. If you as a consumer is saying balanced risk you are saying this from an immediate perspective as you are scared and feel that atleast half my money is very safe. But for e.g. if you decide to invest in an diversified mutual fund for the next ten years it is almost certain that you will make money and far more money than what you would make in a FD or PPF or similar. So where is the risk then? As a consumer, if you plan to build long term wealth you do not need to decide and worry on risk levels it is the advisor who must control risk in the deployment of your funds over time. Even that is part of strategy.

1. Ask the agent on what is the best investment to do? It is easy to identify product and commission driven agents – If immediately or within 2 minutes of meeting you if they jump into any product talk and sales mode just press the eject button and don’t waste further time. Unlikely that the person can really guide you well so meet the next person. You have to shop a little here.
2. Ask the agent – To comment on your current investment strategy? If he tells you what your asset allocation is and how it will help you, which product will be of use to you, which is irrelevant today, which to retain (equity shares included) – that good advice.
3. Ask the agent – What is the right strategy for me? If you agents is knowledgeable and can educate you on your strategy – current and future, asset allocation required, your risk return framework and what should be the methodology suited for your requirement then – that’s good advice. If he can show you a method to build wealth consistently over the next 20 or so years or as long as you want – that’s good advice.

Comprehensive Advice:

1. Ask the agent – What areas will he be able to give you advice on? If he can take care of everything i.e. budgeting, cashflow management, tax efficiency, insurance requirement calculations, retirement funding estimates, children’s career funding, goal funding and planning, estate planning, portfolio management – that is ideal. If he is well qualified he will be able to offer you wholistic and comprehensive advice – that will be good advice.
2. Ask the agent – What is his method of working? This speaks of his dependability and capability. You need someone who can take care of things while you are busy with your own work and he is easily available or someone is available to answer your queries and concerns as they arise.
3. Ask the agent – How does he keep his knowledge updated? The Power of Knowledge can be easily seen – in the fist 2 minutes of conversation even if it’s over the phone. If the person has a system of doing research, uses technology and can demonstrate that – then that’s good news.
4. Ask the agent – How will he monitor and what technology support he uses? Will he keep you updated and if yes – how? Please take time to understand agents systems & processes for execution of your portfolio. If there are none – its bad news.  If the agent can monitor your affairs independently – that’s being able to get good advice.

Remember you are not asking for much – this is quite a standard practice in most developed nations around the world. A good advisor must be able to answer to your satisfaction – only then would you judge & hire him to manage your hard earned money – Isn’t it?

Shortcut – if you want to skip the above – Look for qualifications & credentials and if the person is someone who is not connected with any institution there will be no chance of any bias and most likely you will get – Good Knowledgeable Advice.