Wealth building process is more important to humans than the actual wealth itself. If the process is gruesome and uncomfortable, the choice of the Majority would be to maintain status quo.
The choice/options/flexibility available in the financial products are rarely exercised; however, these tools are important psychological support provided to make the investors feel comfortable and safe.
It is rather reassuring to learn all the options and tools available to the contemporary financial products are indeed provided in the instruments/strategy where we have invested.
Though every PMS Manager is fully competent to provide the best risk adjusted returns on your investment, it is comforting to note the investor is provided with many tools. We are surprised to note many are not aware that PMS provides all the flexible options available in the Mutual fund industry. Yes, many PMS Companies provide SIP/STP/SWP/SWITCH/TOPUP of these options.
The strict compliance of the SEBI regulation is practiced by all the PMS. While, we discuss the features of SIP/STP/SWP/SWITCH/TOPUP, investors are advised to note the terms & conditions stipulated.
We cannot time the market. Hence, it is prudent to reduce the quantum of purchase when the price is higher and increase the quantum to benefit more when the price is lower. We follow this principle, in our day-to-day life while buying the vegetables (especially onions). The principle is applied in investment. This method is called the rupee-cost-average.
Rupee cost average is automatically achieved by investing same amount at periodic intervals for a stipulated period. This is termed as Systematic Investment Plan (SIP).
The SIP is permitted only as additional investment (25 Lakh already in the portfolio). SIP is accepted @@ 2 Lakhs (minimum) per month (there are PMS with 1 Lakh per month as minimum).
When you are concerned about markets, you may opt for STP option. Your investment is initially invested in the Liquid portfolio, and then a portion of the corpus is transferred periodically to the equity portfolio.
There are marginal variations in the plans offered by different PMS Managers, the salient features and variations are:
PMS Company “A” – STP features
Additional investments are permitted by the PMS
While some PMS accepts 5 Lakhs as minimum TOPUP, others accept even 1 Lakh.
The investor may opt to invest his corpus spread into various portfolio strategies of the PMS, subject to the provision that the minimum (total of all portfolio strategies) in the same PMS is 25 Lakhs (as per SEBI regulation). Minimum corpus in each strategy stipulated varies from PMS to PMS.
Switch is the option offered to the investor to transfer the funds from one strategy to another of the same PMS, either partly or fully. (Subject to minimum switch value stipulated) Many PMS Managers simultaneously operate number of portfolio-strategies. While each strategy genuinely adheres eternally to the strategy devised, investors may feel another strategy of the same PMS is better suited for him. In order to provide flexibility to the investor, the switch option is offered by majority of the PMS. Switch option also caters to another principle of safer-strategy. We cannot time the market to invest; it is equally true, that we cannot time the market to exit too. We can switch to Liquid strategies in phased manner to exit.
After staying invested for few years, the portfolios grow to bigger corpus. An investor may not need the entire corpus, can withdraw partially subject to maintaining the minimum threshold.
There is “NO-Lock-in” period for the investment in the PMS; hence the investor has full freedom to exit anytime. However, PMS companies charge exit load to discourage short term investors. However, after certain period of holding the portfolio, they allow withdrawal without exit load. The period varies as per the strategies and PMS Company.
With all these tools under our wraps, we are sure to trot our Wealth-building journey serenely.
We, at PMS-bazaar, are fully conversant with all the variations in the market. We remain current and updated on the latest changes in all the PMS. We are professionally competent to match the right PMS for your unique choice.
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