2023 – The year of the DIY investor

Wish you all a happy, healthy and prosperous 2023 from all of us at PrimeInvestor! 

The first month of 2023 marks the completion of three years for us at PrimeInvestor. Thank you all for coming along with us on this journey! We couldn’t have entered the investment marketplace at a better time, and here’s why!

Times of momentous change

‘The times they are a changin’ (remember the Bob Dylan song?). Globally, we are in an era of momentous change and upheaval. While there are old fashioned and cruel wars on one side, there is artificial intelligence that says, ask and you shall have it – jokes, essays, codes and research papers on chat! 

Closer to our turf, there is rapid innovation of investment products – across bonds, deposits, mutual funds and ETFs. But such rapid innovation without sufficient investor awareness and empowerment can lead to bad outcomes! With the accelerated growth of digital age (thanks to Covid) and the influence of social media, there is a fierce urgency for you – the consumers/investors – to be empowered with information, knowledge, insights and solutions that are trustworthy. And that is the need we are trying to fill at PrimeInvestor!

When we set out to provide PrimeInvestor as an investment solutions platform for do-it-yourself investors, we were clear about one thing – we wanted to provide high quality researched recommendations at an affordable cost to investors, without any agenda, leanings or dependencies. (After all, the Indian investment landscape has been built through the push model of distribution/agent/commission). 

Today, thanks to 2 years of Covid and more new products in the market, the need to have such a service is heightened as a result of the deluge of information and seemingly expert views, largely driven by agenda. 

Why it is the right time to be a DIY investor

We think this is the right time for investors like you to take control of your investments. And here are the top five reasons to do it NOW!

1. Fewer funds outperform: In the mutual fund space, which is where most of you invest, the probability of a scheme outperforming the index is falling.  This is true across categories such as large cap, flexicap, large and midcap. Going by the performance of the last 3-5 years, there is a 3 or at best 5 in 10 chance that your fund will outperform the index. Poor quality recommendations or poor choices of funds can make this probability even lower. That means there is a real need to hold passive funds in your portfolio or to very carefully pick and remain alert with active funds. 
2. Returns more sensitive to expense ratio: With the margin of outperformance of funds thinning, expense ratios of funds will further eat into your returns. And doing the regular plan route – offered by your banks, distributors – will not help, as the additional cost (commission) will make it more difficult for your investments to beat the benchmark.
3. Low-cost products getting buried: Whether it is ETFs or index funds or the now-accessible government securities (G-Secs) and state development loans (SDLs) or the quietly delivering RBI floating Rate Bonds – none of these are going to be marketed by your regular agent channels as they fetch little to no income for the sellers. If you remain unaware of such quality products, the loss will remain yours. 
4. Risk of choosing toxic products: While there is tremendous product innovation and ease of access, there are also products that are highly unsuitable for retail investors that have made it to the forefront. Junk bonds and other high-risk lending instruments, derivative strategies where retail investors can bleed or Ponzi schemes with an outward package of guaranteed investment plans are all doing the rounds in the last two years. Social media has made it far easier than ever to nudge you into accessing them! If you remain unaware of investment products and regulations, there is a high chance of you losing money through one of these channels. 
5. All execution, no advice: Post Covid, the number of platforms through which you can buy financial products has rapidly multiplied. But investing is different from buying groceries or clothes or what not! The quality of the product and its suitability for you would determine whether you should pick and invest in one. Most large platforms do not provide this service or provide very little of it – leaving you with myriad options to choose from. And to find your way, you are forced to rely upon media recommendations or worse, YouTube reviews of investment options. There is no onus in such channels in providing the right recommendations apart from them being driven by advertisements/endorsements. 

How we help with your challenges

At PrimeInvestor, you will find solutions to the above challenges in the following ways:

1. Cut out the clutter: Our deep research helps you filter out the unsuitable products and stick to ones that matter. For example, we have avoided recommending from many fund categories that serve little to no purpose. We were early proponents of passive funds, and even within passive funds, we made sure to recommend only those that were useful. We encouraged you to adopt a blend of passive funds and add active funds, where outperformance was promising.  
2. Reduce your cost: Our primary objective through our recommendation service is to help you go direct (without intermediaries). Whether it is mutual funds or government bonds or insurance products, you can skip the middleman and save on costs. This can be as much as 75 basis points for mutual funds and several percentage points for insurance. And you don’t need to be an expert investor to do this. The table below will tell you that many of our offerings are meant for beginners. 
3. Add low-cost, high-quality products: Whether it is our recommendation of passive funds or government savings schemes and worthwhile pension options, or timely calls on government bonds, you will be able to unearth many quality products that nobody in the market is going to tell you. 
4.  Stay away from toxic products: With us, you can be assured that we also tell you where not to invest. We have not only written about products that are hazardous for your wealth but also answered dozens of your queries when you want to choose those new and fancied products. We can be a good deterrent agent too 😊
5. Get sound recommendations: You may be on the best platforms be it Zerodha, Upstoxx or myCAMS, MFUtility or the AMCs. But at PrimeInvestor, we ensure you get the right recommendations for all of the retail products you invest in, without expecting you to buy through us and without the need for you to churn your portfolio to generate brokerage for us. Our job is to ensure you get timely recommendations. Since we take no commission and we are not affiliated with any of the investment products in any way (structurally independent as we call it), you get unbiased views and recommendations.

You have two options to get unbiased advice. One, the fee-based investment advisor route if you have a large corpus or do not have the time at all for some DIY research. Two, a service like ours that can provide actionable research and recommendations and help maintain a healthy portfolio at a very affordable cost, without any risk of bias creeping in. You will be free to use any platform to execute the same. This will also ensure you are the one in control of your investments. Besides, compared with the first option, the range of products we will cover and the deep research we bring are unlikely through a regular advisory channel where secondary research is used.

How to use PrimeInvestor optimally

Many of you still think we just write blogs. And that we provide recommendations through blogs. But there are a number of tools and recommendations that you can use, without the need to go through the reams of content we write 😊

The tables below will tell you the nature of recommendations and tools on the platform and their suitability based on whether you are a newbie or seasoned investor.  

You will notice that you will not get recommendations in all the above products under any other single platform. Most research recommendations outfits focus on stocks and a few do mutual funds. We are different in the range of products we recommend - from faithful old fixed deposits to mutual funds, to stocks, to privately-placed high-yield bonds, and all the way to health & term insurance. And we take pride in that we have built data-based models to research and analyse every single one of these products before making recommendations. Such models may not always deliver top notch. But they will definitely reduce errors and risk of downsides.

Now to our tools that many of you may not be aware of 😊 No researcher/advisor would be comfortable revealing the tools he/she uses to do the research. But we beg to differ! Tools such as the MF portfolio overlap tool or expense ratio calculators can really help you avoid duplication or high-cost products with ease. Our MF screener can help you with almost all key metrics needed to assess a fund. And our analysts themselves use our stock screener to do the initial shortlist!

To top this, you can use our content for the following:

• Read detailed reviews on the recommendations we make
• Alerts on key strategies in debt and equity
• Primers/basics that equip you to do your own research on mutual funds, stocks, ETFs and more
• Know how to use our tools to make your research easier. 

Using our recommendations, tools and content and cutting down on just one Netflix movie a month, we are quite confident you will excel in managing your portfolio. That’s pretty much what I do for my own portfolio 😊

Adding value in 2023

As we move into our fourth year, we want to ensure we work with you towards a future that meets your financial needs better. That primarily means overcoming the one key limitation we have today – which is the need for more customisation. Towards this end, we will be focusing on four specific areas to pursue customisation and make the platform more personalised for you. They are:

• Build your own portfolio – where you can use our Prime Funds to build a portfolio that will be guided by our system.
• Community – Create a community of investors to share investment ideas and experiences and enhance collective learning for all of us.
• Enhanced portfolio review – that will go beyond just telling whether your funds are good or bad and provide further actionable solutions for your entire portfolio.
• Dashboard – that makes it easier for you to find what you are looking for and alert you to changes that might need your attention.

At PrimeInvestor we firmly believe that you don’t need to look at the P&L of finfluencers to gain confidence to invest. Our job is to ensure your own P&L looks good enough to inspire you to invest safely and confidently! 

Happy new year and happy investing!