SEBI Registered Advisory Company – When should you appoint one?

Are you someone who has burnt pocket in the Indian stock market? Do you feel you could have made money or saved your capital if you had some insight on the stocks you invested in? if you are a working professional who has no time for investigating companies, yet wants exposure in the share market then you should definitely hire a SEBI registered advisory company. 

In the following article, we will try to put across reasoning on why an average equity investor should subscribe to the service of a SEBI registered advisory company.

Does Age Matter to decide on when should you hire a SEBI registered advisory company?

Warren Buffet, one of the richest men to live in our times has publicly spoken that he regrets not starting early as an investor. You may be surprised that warren buffet made his first stock market investment at the age of 11 years when most of us break our heads on Mathematics.

Should not we learn from Warren Buffet’s advice and start right now. SENSEX was 700 points in 1989 and in 2019 it has touched 39,250 points a staggering 57 times in 30 years or a reasonable ~15% CAGR since 1989. If you invest your money at 15% CAGR, then it will double every 4.5 years.

What we learn from this illustration is that, age matters a lot in investing, it decides if you retire rich. So all college graduates, start putting some money to work right away by subscribing to your favourite SEBI registered advisory company.

What to do if you don’t have knowledge in Indian Stock Market?

Reading annual reports, doing equity research, following the quarterly results of stock you invest into takes effort and it is not child’s play for a working professional, then what should you do if you want to retire rich and do not have the intellectual capital to read on investing in stocks? 

In such a case one should go to SEBI registered advisory company where the people are full time into money management and take capital allocation decisions for clients. 

SEBI (Securities and exchange board of India) is the regulator of Indian capital markets which authorizes and issues registration numbers to stock advisory companies who have to sit for a test prescribed by SEBI. Once a SEBI registered investment advisor clears the test, only then can they pool funds from investors.

You are a CA/CFA- Do you still need a SEBI registered advisory company?

Now, you have the intellectual capital to read balance sheets, income statements and cash flow statements of stocks in your portfolio because you are a CA, CFA, but do you practice portfolio management full time?

If you are not practicing portfolio management then after a while keeping a track of your diversified portfolio will take a toll on your brain.

In that scenario, your intellectual capital of a CA/CFA will help you choose the best SEBI registered investment advisor. You as a CA/CFA can interview your SEBI registered stock advisory company on process they adopt while filtering companies for clients. How diversified is the portfolio and how much risk adjusted returns have your SEBI registered advisory company posted in the past.

What Kind of Equity Investor are you?

Are you an equity investor who gets anxious about stocks picked by gut feel? Do you get jittery and agitated when stocks picked randomly in your portfolio start to fall? If you express emotions of fear and self-doubt then you should definitely subscribe to a SEBI registered advisory company.

It is smart to know your personality rather than acting brave in a volatile stock market. SEBI registered advisory company can guide you in your equity investment journey and help you achieve financial goals such as meeting big ticket expenses such as buying a house, child’s education etc.

Is it Expensive to subscribe to a SEBI registered advisory company?

Generally speaking, a SEBI registered advisory company will have its interest aligned with yours because unlike mutual funds advisors who work on regular model, these SEBI registered investment advisors will participate in sharing profits with you along with a minimal fixed fee. When a SEBI registered investment advisor wants a share in profits, then he ought to work to make sure the clients makes money in the long run.

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