Are you the fund manager of your goals and dreams?

Having a clear goal can be a key differentiator to managing our finances. A discussion

Published on / By M. Pattabiraman Twitter: @pattufreefincal

Published: January 1, 2025 at 6:00 am

“Are you the fund manager of your goals and dreams?” We discuss why every individual must ask themselves this question and act accordingly.

When put like that, it seems obvious. Yes, we are the fund managers of our dreams, our families and their well-being. But do our actions reflect this?

Consider our beliefs, the kind of questions we ask on money management or the issues we worry about:

  • We naively believe that because the Indian economy is expected to grow, our portfolio returns will always grow, and all we need to do is keep investing. Sorry, it does not work like that! See: The stock market always moves up in the long term, but returns move up and down! And Equity may beat inflation, but that doesn’t mean you will!
  • We see something shiny and want a piece of that – Gold has given great returns in the past year. So can I include gold for “diversification”?
  • We see the mid cap rally and wish we had invested more in caps
  • Is this a good time to start a sip? Everyone is saying the markets are going to crash. Or is this the right time to book some profits?
  • Can I avoid rebalancing and adjust the amounts I invest instead?
  • We want to optimise tax at every instant regardless of the risk it poses, be it inflation or loss of investment.
  • We chase after returns without thinking, “How are such high returns sustainable?”

The list is endless, but the point is short: are we acting in the best interest of our goals and dreams? In other words, are we a fiduciary to our own cause?

Sadly, the answer is frequently no. If we were, we would be focused only on the goal and the corpus needed to fund the goal, focused only on minimising risk in the journey. We would respect our hard-earned money a lot more and leave it to the fate of luck and market upswings.

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We would focus on asset allocation and rebalance the portfolio at regular intervals. We would not obsess about individual stock or fund returns and instead take a top-down approach to our portfolio analysis.

This is why we must ask, Am I the fund manager of my goals and dreams?

If you think you are not, becoming a fund manager is hardly rocket science. All you need to do is list your goals and devise a tailor-made plan. This will automatically fix the priorities and ensure we remain fund managers, not return-chasers.

This reasoning is explained in detail here: Why our investments need a goal even if we don’t?!

If you wish to get started, consult his free seminar: Basics of Portfolio Construction: A Guide for Beginners.