Revolutionizing Investments: The 9-Box Investment Strategy

A wise investment choice now is equivalent to having a sound financial future. However, the execution of the strategy can be a brain-drain task. You are bombarded with terms like "diversification," "asset allocation," and "risk tolerance” the moment you type the search. Navigating the complexities of the world of investment can feel overwhelming, especially for first-time investors. Questions regarding emergency funds, risk-returns, tax, and many more are daunting; however, expert guidance can help here.

There is no room for guesswork in investing. Our 9-Box Investment Strategy does precisely that by framing a clear roadmap based on your financial goals and risk appetite. 

Understanding the 9-Box Investment Strategy

Nearly identical to McKinsey’s 9-Box Model, this financial investment matrix serves as an assessment tool for investors to measure risk and time. As the name suggests, the 9 boxes in the matrix represent a unique combination of risk and time factors. 

This is how the risk-time factors are distributed in the matrix and what each signifies:

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Risk Levels

• Low Risk: These investments have minimal potential for loss.
• Medium Risk: Moderate-risk investments balance safety and return.
• High Risk: High-risk investments have the potential for significant returns or losses.

Time Horizons

• Short Term: Investments expected to yield returns in a short period.
• Medium Term: Investments meant for an intermediate period.
• Long Term: Long-term investments are expected to yield returns over an extended period.

Based on the above matrix, the assets are allocated. Here is the screenshot of how each of these boxes is translated into real-world Indian investment options:

Low Risk

• Short-Term: These are safe, short-term investments like Liquid Funds and Bank Fixed Deposits (FDs).
• Medium Term: Corporate bonds fall into this category, offering safety and moderate growth.
• Long-term: Include assets like blue-chip stocks or real estate that are expected to grow steadily over the years. Cube Wealth, however, doesn’t have any products in this category.

Medium Risk

• Short Term: This category includes slightly risky short-term options like Arbitrage Funds, Gold, SDI, and Corporate FDs.
• Medium Term: Balanced mutual funds or index funds can be placed here, offering growth and safety.
• Long-Term: This group includes high-risk products, real estate investment trusts (REITs), mutual funds, and Blue-Chip stocks that are expected to appreciate over the years.

High Risk

• Short Term: Cube Wealth doesn’t recommend any products in this category, but investors with a high-risk appetite can still explore other options, like cryptocurrencies or speculative stocks. These can yield high returns quickly.

• Medium Term: Includes aggressive growth mutual funds or stocks of emerging companies with high growth potential but also higher volatility.
• Long-Term: Venture capital investments or speculative real estate projects fall here. They have the potential for significant appreciation over many years but also carry high risk.

Whether you are considering a short-term or a long-term fund for investment, emergency fund or mutual funds, the 9-box Model will help you understand how to cover a range of risk levels and time horizons when diversifying your portfolio. Such an approach can maximize your returns.

That said, this Model's ultimate success relies heavily on your risk tolerance and investment goals when selecting assets for each category.

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Evaluating the Influence of Factors on the Investment Strategy

“Money isn't the end goal. Money is the by-product of living a good life.” - Satyen V. Kothari.

Financial investments are not a one-time objective, and they are not static. Several factors influence your decision other than external factors. Your risk appetite and current situation in life are some of them. Based on the parameters, you can see how you can match the 9-box investment strategy to serve your investment objectives. 

For a better understanding, let’s evaluate the influential factors below:

The Impact of Your Life’s Stage

Your approach to investing for wealth accumulation can change according to your current stage of life. When you start your first job, your end objective for investments will be different compared to when you earn more, get married, have children, etc.

Therefore, regardless of where you are in your life, always have a foolproof investment plan to build a perfect portfolio of wealth that is aligned with your objectives, time, and risk-taking capabilities.

For example, Meet Naina. In her 30s, she earns a good income but frequently changes jobs, with only some savings and no dependents. Since her job situation is uncertain, she needs a short-term safety net and should invest in low to medium-risk options. However, without dependents, she can also explore high-risk, medium, and long-term investments for potential growth. By investing in high-quality assets and getting expert advice, Naina could break her cycle of relying solely on her income and start building stronger financial security.

Your Wealth Psychology

Even though you might be advised to listen to others, you must decide for yourself which investment is the best one for you. Your decision is bound to be influenced by others' experiences. However, the appropriate approach should be to draw valuable lessons from others' investment and financial conditions and figure out your own path.

Always consider the fact that investing is a game of gambling, and there will be periods of losses and gains. So be prepared beforehand and resort to the expert guidance of an advisor if the stress of investing is overwhelming for you.

Risk Level

Here is a simple formula to calculate your risk appetite if you are not confident about the same:

Risk Level = Your Life Stage + Your Psychology with Money

Both factors, along with the time horizon, can tell you how much risk you can take at certain stages of your life. Based on the analysis, frame your 9-box investment strategy, understand which risk and time horizon best match your requirements, and plan your investments accordingly.

How to Build Your Perfect Portfolio – A Few Points to Consider

Building the perfect portfolio requires a step-by-step approach, balancing both your immediate needs and long-term goals. Follow these key strategies to ensure your investments align with your financial objectives.

Fill The Buckets Top Down

Start with short-term investments (0-3 years) before moving on to medium—and long-term goals. Most investors mistakenly invest in stocks and mutual funds without first securing short-term stability.

Invest in Quality Short-Term Options

Prioritize high-quality investments for your short-term or emergency bucket, ensuring liquidity for any immediate needs in the next few years.

Diversify Within Each Box

Only put some of your money into one asset class. Spreading investments across at least two types ensures you're covered in case one underperforms.

Use Multiple Mutual Funds

Cube Wealth recommends diversifying even within categories by investing in at least two mutual funds per asset class to reduce risk and maximize returns.

Monitor Your Investments

Instead of constantly adjusting your portfolio, monitor it quarterly to ensure it stays aligned with your goals and performs as expected.

Evaluate Your Financial Portfolio Annually

Review your portfolio annually or after significant life changes to ensure it still meets your long-term financial objectives, securing your path to financial freedom.

Invest At Ease with Cube Wealth

When the investment and wealth planning become too overwhelming for you to handle, consider appointing an advisor to do the heavy lifting for you. At Cube Wealth, we will guide you in crafting a well-diversified portfolio that is tailored to your risk level and timeframe. Our expert advisors always ensure your investments match your financial goals and risk appetite while generating maximum returns, all without the hassle of self-management.

You can try our powerful investment app to guide you in your wealth accumulation journey. Here are five reasons to give our application a shot:

• High-Quality Mutual Funds
• Top Notch Stock Advisory
• Invest In U.S. Stocks
• Expert Financial Advisors
• Alternative Investments

Learn how to invest and grow your wealth with Cube

The Final Takeaway

Investing doesn't have to feel overwhelming. With the proper guidance, you can confidently navigate the financial world. The 9-Box Investment Strategy simplifies Investing, making it easy for anyone to create a balanced portfolio that matches their risk tolerance and goals.

Using this strategy, you can build a diversified portfolio that fits your needs. Cube Wealth offers expert advice and a personalized tool to streamline the process.

Don’t wait—start your investment journey with Cube Wealth today and take control of your financial future. The best time to start is now.

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