Investments are assets that are tailor-made to achieve one’s goals – emergency corpus, retirement, education, marriage, or even a world tour!
All the factors are subject to differ from investor to investor – age, resource availability, investment needs and goals, and risk appetite. But one thing, ideally, needs to be constant – a CORE Portfolio that forms the foundation of the investment portfolio.

It is made up of funds that you plan to hold for the long term, regardless of market fluctuations. When building a core portfolio, it is very important to consider one’s financial goals, time horizon, and risk tolerance.
While it can be observed that many investors have similar schemes in their portfolios, it is also important to understand that no one size fits all. In other words, no one portfolio will be suitable for all investors even if they share common goals but in different time horizons or with different risk tolerance levels.

The core portfolio must be built based on fundamental principles – or what we call the “first principles” at InvestCart. They include:

1. Risk Appetite
2. Investment Horizon – Years to go to meet the financial goals
3. Asset Allocation – Diversifying into various Asset Classes
4. Investment Philosophy of the Fund House
5. Fund Manager Track Record
6. Scheme Risk Ratios vis-a-vis Performance & Consistency

It is imperative to understand that the core portfolio can be built over a number of years and investors having achieved 70-80% of their financial goals can wish to consider building satellite portfolios which will consist of schemes that need not be necessarily mapped to their needs. In other words, satellite portfolios can be built under the condition that the mapping of assets towards goals has already been done and a significant level of goals has already been achieved. However, following the first principles will be handy if one is confused on how to create a satellite portfolio.

Ultimately, disciplined investor behaviour, asset allocation, a good understanding of one’s risk appetite, and need-based approach are the key determinants to achieving financial goals. To sum up, don’t follow the herd when it comes to investing. Build your core portfolio based on your own needs and goals, and don’t be afraid to go against the grain, yet to stick to fundamentals.