As an investment advisor, Scripbox is tasked with the job of ensuring that investors reach their desired (within reason) outcomes. This involves building from the foundation – upward. This is how we see our role:
- Spread out client wealth into multiple portfolios aligned to their purpose
- Design the right asset allocation for each purposes-aligned portfolio & manage risk by design.
- Evaluate the landscape and identify good investment managers.
- Provide a convenient execution mechanism to invest.
- Track investments and make periodic interventions if required
- Ensure completion of investment journeys by managing customer emotions
Investing purpose & its hierarchy
We think of Clients’ purpose of investing in terms of 4 broad buckets of needs:
- Emergency needs: liquid assets that can be consumed quickly in case of an emergency. The timing of these spends is unplanned. These assets may be supplemented by a line of credit (Credit card or overdraft)
- Short-term needs: Assets with high liquidity or target date liquidity that are required to be converted to cash to pay for planned expenses in the next few years. Since the expenses are planned and may not be deferrable, a focus on capital protection is required.
- Long-term needs: Assets that are not likely to be liquidated soon and will pay for the client’s long-term needs (like retirement, children’s education etc.). Being long-term in nature, these need to beat inflation.
- Beyond Essentials: Assets that are not likely to be liquidated to meet the client’s lifestyle needs. These assets are very long-term in nature.
The hierarchy of purpose follows the same sequence. Clients, and we, on their behalf, must plan for emergency and short-term needs before committing assets to long-term portfolios.
This ensures that clients have a long-term perspective for most of their assets, do not panic in case of market turmoil, and their long-term assets do not need to be liquidated for short-term needs.