Hi, The most important feature of a good investing decision is that it is based upon relevant information, which comes from research.

Hi, The most important feature of a good investing decision is that it is based upon relevant information, which comes from research. Of course, not many of us have the time, patience or the knowledge to carry out this research to make the best decision for our portfolio.

In this situation, it is best if we consult a financial advisor. Who is a financial advisor? In simple terms, it is a person who is qualified and equipped with the relevant skills that are needed to assist people in making investing decisions which suit their risk appetites and their objectives. Suppose you decide to take the help of a financial advisor to help you invest in the best mutual funds for your various financial objectives. This is not an easy task. Choosing the best financial advisor requires some research too. We could always ask an advisor about their fees, qualifications, etc. and compare them on this basis. However, don’t you think it will be more practical if we understand their methodology and then use it as a basis of comparison? The best way to do this is to ask some questions about mutual funds and understand their perspective on investments.

Let us look at the three key questions we should ask a financial advisor about mutual funds. First is How do you invest in mutual funds? This question might seem unusual and out of the blue, but it is quite important. As we said, researching an advisor is about knowing their perspective, and the best way to do that is by asking them how they invest their own money. If they do share their personal strategies with you, it shows that they are confident in their abilities to handle your funds skilfully. Moreover, you can also inquire about their opinions on different thumb-rules and portfolio strategies. By doing this, you will be able to create a clear picture of what their approach towards the market is – whether they invest aggressively, or cautiously.

Next Question is Which mutual fund do I choose for ________________? Try to test a potential advisor by giving them separate situations. For example, ask them about which funds they’ll choose if you are investing for retirement, or if you’re just saving up for a vacation. If the adviser is able to give you a clear breakdown of how you can save up for different situations, you can rest assured that your advisor – Has the ability to adapt to different scenarios; and Can cater to different investment objectives simultaneously. Last question is How will you measure the performance of my portfolio? To ensure that an advisor is making the best possible decisions for your portfolio, they will have to measure its performance regularly. This aspect is often overlooked by investors as clients, but it is important to enquire about.

Why? There are a plethora of ratios and formulas which are available for measuring performance of a mutual fund and a portfolio. Each measure is suitable for different situations and investment amounts. To make sure that performance is being measured accurately, you should ensure that your financial advisor will keep all the features of your portfolio in mind while measuring its growth. This question will also help you understand if your financial advisor is flexible in their approach, thus helping your portfolio adjust to market trends timely. No matter whichever mode of investment you are opting for, it is always advisable to understand the product well.

By understanding the product well, you will get clarity on the product and also, you will be able to understand as to what queries to put forward to your financial advisor.