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ASK THE RIGHT QUESTIONS BEFORE INVESTING

Kavin Karunamoorthy, Senior Manager of Asset Management at First Capital, reveals points to consider both for those already in the know and those hoping to cautiously test the investment waters.

Don’t put all your eggs in one basket!
As the age old saying goes, it is important that you understand that you should not put all your investments in one tool. Investment banks or wealth managers can help you manage and diversify your investments, while lowering risk and maximizing returns. Hence, it is important to seek out information from the correct sources.

Time and goals setting
Investors should consider four main points: First, they need to identify their short-term and long-term financial goals i.e. how and when does he need the money. Second, they need to plan the funding capacity i.e. understanding your ability to allocate funds for investment purposes either as a lump sum or on a monthly basis. Third, identify the investment time horizon that you have earmarked for your investments i.e. anticipate when you will require your funds. For example, you may require a monthly income after retirement as well as a lump sum to finance your children’s university education or buy a second house. Finally, evaluate your risk appetite and acceptable risk level. One needs to understand that higher the risk, higher the return, and similarly lower the risk, lower the return. A risk-averse investor may choose to invest in low risk fixed income instruments such as treasury bills and bonds, bank deposits, unit trusts and listed corporate debt. An investor with a higher risk tolerance could look at instruments such as the stock market, property and real estate, unlisted corporate debt, or derivatives.

As Sri Lankans what sort of investors are we?
We find that Sri Lankans are generally risk averse; this can be attributed to two factors, first, the lack of financial literacy, and second, the bad experiences of the previous years. However, you do find individuals that take risks and reap the rewards; after all, most of our top investors have taken calculated risks to be where they are today.

Still, in recent times, we have seen slight growth in interest from younger entrepreneurs and executives towards planning their retirement etc. We want to encourage this trend and create more awareness about the investment tools available at different income levels, so that even if they don’t have large funds in hand, they can plan and set goals to achieve their financial aspirations.

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What the experts bring to the table
A professional wealth manager is able to give the investor an overall picture of the financial market, including its past, present and future cycles. It is the role of a wealth manager to provide investment strategies across all asset classes for individuals and corporates, while keeping track of market opportunities, recognizing trends and matching them to your interest, with a focus on performance, liquidity, risk management and other relevant factors.

Companies charge either a flat advisory fee or fees linked to performance.

Enlisting a wealth manager
If you have chosen to enlist the services of a professional wealth manager, in addition to acknowledging risk level, expected return and the period of investment, be sure to meticulously evaluate the instruments as well as the wealth manager’s credentials and the track record of the companies with whom you intend to place your hard-earned money, and don’t be afraid to ask questions.

In Sri Lanka, a wealth manager must be licensed and authorized by the Securities and Exchange Commission of Sri Lanka (SEC), in addition to owning the necessary proficiency and competencies in relation to investments and wealth planning. Finally, the approach that your wealth manager takes must be philosophically consistent with how you view the world.

The First Capital difference
We understand that not everyone’s requirements are the same, that is why we take the time to sit with our clients and map out their lifestyle, considering inflation and other economic, geopolitical and environmental factors that affect income and expenditure. Although it’s a time-consuming affair, it gets people excited because it shows them just how much they need to put aside for a comfortable future. Backed by over 35 years’ insights into investment trends and markets access, First Capital is in a unique footing with a 360-degree view of the financial market through the collaboration of in-depth knowledge from its primary dealer unit, stock brokering unit, corporate financial advisory, wealth management arm, research unit, structuring and placement arm, and regional branch network to provide holistic solutions for our clients. Additionally, our team comprises experts from the banking and finance industry, capital markets and the real estate industry, enabling us to service clients’ needs across asset classes.

Our focus is to provide our clients with a positive return, while safeguarding their capital. To this extent, we have strong internal risk management processes in place to monitor and ensure that every investment we make on behalf of our clients are within the parameters of the SEC, Central Bank regulation and our own code of conduct.

First Capital is the only listed and rated investment bank in Sri Lanka, reflecting governance standards and transparency. The company is rated Aby ICRA Lanka.

 

At First Capital we provide a multiple Wealth Management solutions for individual and corporate investors to achieve your financial aspirations.
Backed by over 35 years of expertise, insights to investment trends and markets access, First Capital’s professional fund managers, ensure that risks are diversified over a multitude of asset classes, to identify prudent investments to suit your investment goals.