Why do we need to See “Risk Management” as the Most Powerful “Growth Driver”?
1) We have brakes in cars because we have a desire to drive fast
2) If the desire was to drive slow then we need not have designed good brakes. Even ordinary ones would have sufficed
3) When you have shock absorbers in cars, it is because you want to drive in Volatile terrain. If the idea was to drive in the city, then what was the need to design outstanding and powerful shock absorbers. If there’s no shock then what to absorb
4) When you have debt in your Portfolio, they act as cushions in a volatile market
5) They ensure that you continue to stay healthy and stay fit to continue the journey
6) They ensure that you venture straight into volatility without a semblance of fear
7) They ensure you pick the small caps and the micro caps without feeling insecure
8) A Great Risk Management Framework, is exactly like modern braking system and modern shock absorbing systems
9) The Dynamic Asset Allocation Category (BAF and Asset Allocator FOFs) has provided a new dimension of Risk Management framework in Portfolio Management
10) This Dynamic Rebalancing works best in the first 3 to 5 years for a new investor
11) The simple balanced fund starts giving comfort after 3 years or after 5 years
12) Equity Funds provide the comfort only after 7 to 8 years of investing
13) What is most important is to ensure the investor stays till 7 years
14) Hence making him stay first 3 years is the critical path
15) And it is here that Dynamic Asset Allocation Category does an amazing job
16) They provide nearly the security of having money in a Current Account (rarely net loss)
17) But on the flip side they can provide the returns of equity fund
I rest my case
