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Build Mutual Fund Portfolio | Investment Strategy 2022 | dezerv. | WealthTech - YouTube
Channel: Financial Programming with Ritvik
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馃憢 Hello financial programmers 馃憢,聽
I am Ritvik Dashora and I am back聽聽
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with a new video and some new learnings today we聽
are going to do something different and special聽聽
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we have crossed 7500 subscribers and聽
today I鈥檓 not sharing my laptop screen聽聽
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I鈥檓 not writing a code but we will explore how聽
technology is penetrating the finance industry聽聽
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and what all factors are important to make an聽
investment portfolio in today's changing world聽聽
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of finance this video is going to be very聽
very informative so I just request everyone聽聽
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to keep a pen and a paper with you and just sit聽
back relax and watch this video till the end
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today I have weber with me he has more than 15聽
years of experience in wealth management industry聽聽
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and he has managed more than 20 000 crore聽
rupees for domestic HNIs which is high net worth聽聽
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individuals currently his co-founder of India's聽
first expert led investing platform dezerv聽聽
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and I鈥檓 also very happy to tell you that I鈥檓聽
also part of this amazing company so thank you聽聽
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so much weber for taking out the time for this聽
thanks Ritvik for inviting me on your platform聽聽
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I鈥檓 really excited to be here I still remember our聽
first conversation when you talked about dessert聽聽
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and how excited I was to join as a founding聽
team of this amazing company we were also聽聽
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quite excited and when I heard about your profile聽
I was quite clear that you should work for dessert聽聽
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and thank god you agreed and moved to India and聽
joined dessert it's my pleasure honestly speaking聽聽
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and guys another co-founder Sandeep talked about聽
the business model of dezerv which is a right聽聽
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blend of experts and fintech right yeah and this聽
is what makes dezerv different right and I still聽聽
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remember that like we work in different type聽
time so it's a start-up culture it's amazing聽聽
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culture by the way guys and all the experts here聽
focus on digging inside any sort of analysis to聽聽
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a significant depth to make the entire decision聽
I would say the entire decision making procedure聽聽
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quite trustworthy right and this is the main聽
spinal cord or the backbone of the dezerv right聽聽
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absolutely and we are using technology extensively聽
what we experienced over the last four to five聽聽
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years arithmetic is technology was everywhere聽
but for some reason investment management was聽聽
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untouched by technology so we dezerv are聽
looking to make sure that there is a right聽聽
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integration of technology and investing and our聽
investors and our members benefit because of that聽聽
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exactly the penetration of technology is very聽
important and if you talk about the investor聽聽
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behaviour I was in Spain at that time and I聽
was just comparing the investor behaviour in聽聽
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European world and India right yeah in India we聽
have a different investment behaviour nowadays聽聽
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mostly retail investors are more focused towards聽
earning a lot of return and in a very very small聽聽
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time period so what is your take on this thing聽
oh it's driven by what they witnessed over last聽聽
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24 months after covet crisis the kind of liquidity聽
infusion which was made by central banks has聽聽
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led to significant up move in the markets聽
and everyone has benefited because of that聽聽
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degrees could be different but everyone has聽
benefited it has created this belief that聽聽
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you can generate significantly higher returns聽
over a short period of time by investing in聽聽
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market but that's not true over time returns聽
always normalize and it's better that investors聽聽
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also align their expectations and bring it down聽
to more reasonable numbers like 12 to 15 percent聽聽
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which is what your long-term market returns are聽
exactly exactly and the concept of mean reversion聽聽
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is very very important I have many friends聽
honestly who have invested in some random stocks聽聽
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and they have made a lot of money actually but if聽
we compare things such as mutual fund investing聽聽
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right and direct in instruments investing what聽
is your take on this thing so different people聽聽
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look at investing differently investing first of聽
all is a specialized job if you acquired enough聽聽
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skill sets to manage your money on your own and聽
you can choose instruments directly you can do聽聽
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due diligence on them and periodically review聽
performance of these underlying instruments聽聽
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you should invest in direct instruments聽
but if you don't have those skill sets聽聽
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if you don't have time and inclination聽
then you should leave it to the experts聽聽
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and that's where this debate of direct聽
investing versus mutual fund ends for me聽聽
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whether direct investing is superior or mutual聽
fund is superior is not a debate it's about the聽聽
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skill sets that you have and what will work for聽
you investors who don't have time and who don't聽聽
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have inclination to manage money should invest聽
through mutual funds investors who can dedicate聽聽
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time allocate time and do research and due聽
diligence on the instrument should invest through聽聽
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direct instruments by same time you mean the聽
skill set required for the research is also very聽聽
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important skill set is primary as I said it's a聽
specialized job so need to start with the skill聽聽
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sets you have to develop the skill sets to be able聽
to do diligence on Instagram but if you talk about聽聽
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the mutual fund entire industry in India we have聽
more than 8 000 schemes which different schemes聽聽
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in India itself so even if we want to pick the聽
best mutual fund we have any options available so聽聽
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how to pick mutual funds the best mutual funds聽
so mutual funds is an umbrella term yeah which is聽聽
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used to describe all kind of mutual fund schemes聽
which are available different investors have聽聽
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different investment objectives and risk profiles聽
so these are the two primary drivers which we have聽聽
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to look at investment needs are different from my聽
investment needs so for him different instruments聽聽
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will work for me different instruments will work聽
so mutual fund has given you this entire choice聽聽
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of investing money across different schemes聽
depending on your investment objectives聽聽
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advisor's role is to align your investment聽
objectives and risk profile with the right mutual聽聽
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fund schemes which will work for your portfolio聽
so that's how mutual fund selection should be done聽聽
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if it was only about selecting mutual funds聽
then there was no need for advice it's like you聽聽
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have chemist shop right and you have a patient聽
doctor has to tell you which medicine to buy聽聽
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okay versus a patient directly going to the聽
chemist shop and saying that okay you have聽聽
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eight thousand ten thousand medicines and I鈥檒l聽
pick up whatever I like I i love the comparison聽聽
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you made between medical health and the financial聽
health right it's absolutely similar yeah yeah聽聽
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we don't like call our friends to to take聽
some medicines yeah we call our friends to聽聽
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to get recommendation of mutual funds that's the聽
unfortunate part of investing everyone everyone聽聽
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believes that they can manage investing but as聽
I said it's a specialized job and you should聽聽
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either take specialist help or you should develop聽
the skill sets before you start managing people聽聽
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focus on historical performance if you talk聽
about talking to family and friends right even聽聽
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if you do google search it's somewhat related to聽
performance right so there is a behavioural bias聽聽
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so what type of things that we聽
should consider as a retail investor聽聽
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apart from performance to pick the best聽
mutual funds but it's an interesting question聽聽
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so I鈥檒l answer this in two parts so聽
first when you're picking mutual funds聽聽
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first step is to align your investment objectives聽
with the right category of mutual funds聽聽
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mutual funds also have multiple categories your聽
fixed income mutual funds your equity mutual funds聽聽
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you have commodities mutual funds you have a聽
combination of equity and debt mutual funds聽聽
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so variety of mutual fund schemes are available聽
depending on your investment objectives you should聽聽
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select suitable scheme once you have done that聽
within the universe that you are narrowed down聽聽
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whichever scheme exhibits certain characteristics聽
of continuous compounding along with risk聽聽
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management and alignment of interest with the聽
investors so I鈥檒l build on all three points聽聽
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and I talk about continuous performance looked at聽
performance of each of these fund managers and you聽聽
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you were involved in that process where we looked聽
at performance of more than 100 fund managers聽聽
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looked at their performance quarter after quarter聽
to check the consistency of performance analyse聽聽
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their performance across various market cycles聽
where the markets were going up where the markets聽聽
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were going down how they were performing evaluated聽
their performance across different economic cycles聽聽
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compared their performance relative to their聽
peer set relative to the benchmark whole lot of聽聽
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work goes at the back to decide which mutual fund聽
schemes to select when it comes to risk management聽聽
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it's again an important part of selecting mutual聽
funds the risk is also an integral part of聽聽
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investing you look at both of these together and聽
basis that you decide on the food so low risk聽聽
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can be measured through variable called standard聽
deviation so understanding standard deviation of聽聽
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mutual fund scheme is also important third thing聽
is about alignment of interest expenses that these聽聽
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mutual funds charge go out of your returns so聽
make sure you are only investing the schemes where聽聽
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expenses are optimized okay you you mentioned聽
about the expenses right yeah and I think 90%聽聽
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of the people don't even know about the hidden聽
expenses and the mutual funds different type of聽聽
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measures say expenses are not hidden in mutual聽
funds they are not communicated so there is a聽聽
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difference between the two regulators require聽
all the mutual funds to declare their expenses聽聽
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so it's not redundant whether communication of聽
those expenses is happening or not is an issue聽聽
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as you know I dezerv before onboarding any聽
investor we discuss all the expenses which are聽聽
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there and we detail it out on our platform so that聽
is an important distinction between transferring聽聽
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so once we have crossed that bridge obviously in聽
terms of expenses different mutual fund schemes聽聽
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are allowed to charge different fee you have to聽
look at mutual fund scheme which is charging the聽聽
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optimum fee for your investment within your聽
investment universe if there are five schemes聽聽
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one scheme is charging one percent and another聽
is charging two percent you have to make that聽聽
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distinction unless the scheme is justifying聽
with higher returns you should always go聽聽
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for a scheme with one percent expense okay and you聽
mentioned that there has to be a mix of different聽聽
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asset classes equity fixed income and also the the聽
style of investing so the passive investment has a聽聽
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lesser a smaller amount of expense ratio聽
as compared to the active investment right聽聽
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so if you have a proper blend of everything聽
then we can actually optimize the cost聽聽
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as well right absolutely and as I said starts from聽
the top you look at your investment objectives and聽聽
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then formulate an investment strategy for your聽
investment strategy optimum instrument selection聽聽
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should be so let's take an example of an investor聽
who is investing five lakh rupees okay he goes聽聽
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to an advisor invest in direct plan on mutual聽
fund and advisor charges him 400 rupees a month聽聽
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right therefore he's charging him 5000 rupees per聽
year on an investment of five lakh rupees four聽聽
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thousand eight hundred rupees is what he's paying聽
which is about one percent in case the difference聽聽
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between regular plant and direct land portfolio聽
is less than four thousand eight hundred rupees聽聽
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per annum then he is much better of investing聽
in regular plan so that distinction also聽聽
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should be communicated to the investors okay聽
effectively what you are paying in terms of fee聽聽
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whether you pay it explicitly by way of advisory聽
fee or implicitly by paying higher expenses in聽聽
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the scheme both the data point should be compared聽
before reaching any conclusion what's your take聽聽
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on taxes how taxes are taxes are again the largest聽
expense category in returns mutual funds typically聽聽
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and I鈥檒l limit this discussion to mutual funds聽
mutual funds typically has two kinds of expense聽聽
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two kinds of income distribution either it can be聽
a dividend income or it can be a capital gain in聽聽
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case of dividend income your taxes based on your聽
marginal rate of tax the slab under which you fall聽聽
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in case of capital gains in case you managed to聽
generate long term capital gains your tax will聽聽
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be significantly lower because that is subsidized聽
the government wants to promote capital formation聽聽
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therefore they say that will give some incentive聽
to our investors who are putting in money for long聽聽
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term second category short term when you don't聽
hold your investments for long period of time聽聽
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which is definition of short term and long term聽
is different across different categories then聽聽
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your rate of tax will be higher traditionally we聽
have recommended our investors to be in the growth聽聽
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plan because most of our investors come to us for聽
long term investing and when you are investing聽聽
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money for long term growth plans are superior聽
on post tax basis relative to dividend plans聽聽
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definitely like for any sort of strategy we should聽
focus on cost optimization yeah tax optimization聽聽
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picking the best asset classes allocating the聽
best percentage of the portfolio to all these聽聽
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asset classes there's a lot of them right order is聽
different so start with your investment objectives聽聽
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okay once you have identified your investment聽
objectives select the asset class which meets your聽聽
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investment objective once you've identified the聽
asset class select the instruments that work in聽聽
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that asset class once you selected the instrument聽
select the portfolio strategy which optimizes your聽聽
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returns both in terms of taxes expenses so a聽
billion dollar question the last question guys聽聽
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is it possible to make the best asset allocation聽
strategy using just mutual funds absolutely purely聽聽
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by using mutual fund because as I said within聽
mutual funds you have all the categories okay you聽聽
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can invest in international markets you can invest聽
in domestic equity markets you can invest in聽聽
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metals you can invest in fixed income you聽
can invest in credit you can invest in reads聽聽
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so you have all the combinations available now聽
the key is to get the right combination which聽聽
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works for you and that's where role of advisors聽
come so they can't access all the instruments聽聽
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which requires larger investment ticket sizes聽
therefore they pull in money and invest as聽聽
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a pool mutual funds are highly regulated聽
and therefore controls are much better tax聽聽
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advantages are many for investing in mutual聽
funds all in all it presents a really聽聽
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interesting combination and an ideal combination聽
to manage your money exactly exactly and yeah I聽聽
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can understand it so it's a difficult task that's聽
why that's that's why dezerv actually solve this聽聽
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problem because we are providing an expert led聽
investing platform by actually providing this聽聽
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asset allocation expertise to all the all the聽
clients right you make the different strategies
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and guys you should also check out the聽
website and put it on the description box聽聽
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and apply for an access it's an only invite聽
basis experience on dessert and with this聽聽
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informative note I would like to thank聽
you to share all your knowledge with me聽聽
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and with all the viewers thanks thanks for聽
watching me really really enjoyed I hope that聽聽
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the information shared today will help you in聽
the future for you to make investment decisions聽聽
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and it will make your financial health better聽
if you don't want to miss out these educational聽聽
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videos please click on the subscribe button聽
and hit on the bell icon thank you so much
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