Portfolio management service (PMS) for greater safety and higher returns

Investing in Portfolio management service (PMS) offers a good and reasonably safe way to get good returns with the help of professional financial planners.

This is very useful for high net worth individuals. In this one has to invest a minimum amount of money with a fund manager. In India the minimum amount required is 100,000 INR (one hundred thousand Indian rupees).

The company offering portfolio management service makes use of experienced professionals with a through knowledge of stock markets, commodity markets, bonds and other instruments. They diversify the investments to maximize profits and minimize risks.

As no one can accurately predict the stock market some time is required for the financial planners to give returns. Hence all such companies require a minimum period before giving profits. This can vary from one fund manager to another. It is usually between 6-12 months.

There are 2 types of PMS schemes-discretionary and non discretionary.

In non-discretionary the company gives advice on investment but the final decision is taken by the client.

In discretionary scheme all the work is done by the company. The investor need not worry about anything.

Service charges: There are different fee structures. Some charge a flat rate on the Net assessment Value (NAV) of the investment. Some companies take a percentage of the profit but may charge for ever transaction. It is necessary to carefully go through the terms and conditions before choosing your portfolio manager.

PMS is somewhat like a mutual fund with some differences. The minimum amount required is much higher than any mutual fund. Also individual stocks are held separately unlike in a mutual fund where only units of the mutual fund are held by the client.

Instead of cash deposit you can transfer existing securities, mutual funds and bonds to the portfolio manager provided the value is not less than the minimum amount required.

How much can you expect to earn? No PMS provider can guarantee any fixed level of profit. It can vary very widely. With a very favorable market the profit can even be more than 50% of your investment. On an average the annualized return may be expected to be around 15%. This is much higher than interest rates on bank deposits.

The greatest advantage of investing in a portfolio management service is that a person need not worry about the markets because the money is being taken care of by experts provided he has chosen a reliable service provider.

Once a person opens a PMS he will have online access to the value of his investment all the time. Any time of the day or night he can log into his account and see how the money is invested and which way it is going.

Requirements for opening a PMS depend on your country. Tax or social security number is required along with photographs and address proof.

If we take all the pros and cons into consideration this is an excellent investment opportunity for high net worth individuals.

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