How did Demonetization Affect your Investments? Equally important is focusing on the right performance metric, one that enables comparison of diverse investments by using a common denominator.
By Chirag Nanavati •
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While global economists debate the effect of demonetization on investment and GDP, closer to home HNIs are keeping an eye on their investments and net worth post demonetization.
Events like demonetization have varying impact on different asset classes and business families ideally want a holistic view of their entire net worth spread across multiple entities. Herein lies the biggest challenge; consolidation of financial data. Information about multiple asset classes, fragmented across advisor reports, spreadsheets and accounting software, makes deducing the real impact of demonetization a cumbersome, labour-intensive process, open to manual error.
Equally important is focusing on the right performance metric, one that enables comparison of diverse investments by using a common denominator. Since Internal Rate of Return (IRR) considers all cash flows and the compounded effect of gains and losses, it works as the best comparative metric, but is often passed over because of the complexities of calculation.
Technology is the silver lining to the grey clouds of asset management. With a software platform like Asset Vantage, you can effortlessly monitor:
- Annualized Returns since inception
A long-term view of investment performance, since the date of purchase. It enables a like-to-like comparison of returns on assets held for different durations.
- IRR for specific periods
Compare IRR for periods of your choice, helps evaluate performance before and after demonetization.
- Advisor Performance
Compare performance of wealth advisors before and after demonetization, and arm yourself with all the right questions for follow on investment decisions.
- Asset Class Performance
Compare the performance of difference asset classes. Spot trends, like the reduced bond yields post demonetization.
If you rely solely on wealth advisors' reports and manually created spreadsheets you will fall short of seeing the complete and true picture of your investments. When markets display volatility you need continuous and easy access to reports that compute short and long-term unrealized gains, information that enables you to plan cash flows and select stocks for tax loss harvesting.
Gear up to stay prepared for events like Brexit, Demonetization or Trump's latest economic policies. Keep your financial data consolidated, updated and available on demand so you can take better-informed investment decisions.
