Date: Nov 2025
When it comes to investing, most people focus on returns. But in reality, returns are just the outcome, not the starting point. The real art of investing lies in assessing what you’re buying, why you’re buying it, and how it fits into your financial journey. At Privus, we often remind investors: “A good investment isn’t just one that grows, it’s one you can live with.” Here are the most important checks to make before putting money into any investment product.
Liquidity simply means how quickly and easily you can access your money when needed, without a significant loss of value. Why does it matter? Emergencies, opportunities, or life goals don’t always wait for lock-in periods to end. Does the product have an exit option, and what are the penalties? How is liquidity in stressed markets (for instance, during 2020’s lockdown phase)? Is there a secondary market (especially in case of bonds) or a buyback clause? Many investors overlook liquidity while chasing yield, only to realise later that their “high return” product locks them in for years. In our advisory experience, liquidity deserves top priority – above even returns.
Complexity often hides costs, risks, or unrealistic assumptions. The more layers a product has, the harder it becomes to judge performance or make timely exit decisions. Complicated structures such as ULIPs, structured notes, hybrid debentures can behave unpredictably in different market cycles. Can you explain the product in one or two sentences? Do you clearly understand how returns are generated and what risks could derail them? Are the costs and tax implications transparent? A simple mutual fund or ETF is often far more effective than an exotic structure with opaque payoffs. At Privus, we prefer products that are transparent, cost-efficient, and easy to track.
Returns are gross. What matters is what you keep. Hidden fees, trail commissions, or surrender charges can silently erode returns. Evaluate all costs such as entry and exit loads, annual management or distribution fees, expense ratios in mutual funds and embedded costs in insurance-linked products. Even a 1% annual difference in cost can compound into a meaningful gap over a decade.
Every product carries risk such as market risk, credit risk, interest rate risk, or even liquidity risk. But risk isn’t just about volatility, it is about whether you can stay invested through it. Understand fully the risk you are exposed to by investing in the product. What could go wrong, and how much can it impact value? Does the product align with your risk tolerance and holding period? Privus often advises clients to build portfolios where risk is measured not by short-term fluctuation, but by the ability to stay the course.
Every investment must serve a role in growth, stability, income, or liquidity. A good product isn’t good in isolation; it’s good when it fits your financial strategy. Before investing, ask does this align with my time horizon? Does it complement or duplicate existing holdings? Is it part of a well thought out asset allocation plan? Without clarity of purpose, even the best product can end up being a mismatch.
A product’s post-tax return is what truly matters. Tax treatment varies across asset classes, and some instruments lose their appeal once you factor in taxation. Check how the gains would be taxed? Dividend taxation and indexation benefits (if any). The idea is not to avoid taxes, but to invest smartly with awareness of the tax impact.
When we evaluate any investment at Privus Advisors, our framework follows this simple order of priority:
Liquidity → Simplicity → Cost → Risk → Purpose → Taxation → Return. Because good investing isn’t about finding the highest return, it’s about building a portfolio you can rely on through every market cycle.
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