Should You go for PMS Services?

Portfolio management services (PMS) Provider

These services are sold with fancy names by big brokerage houses with fancy writeups. However, if you undertake the detailed analysis, you will realise that you are paying too much from your profit for just sheer selection of a few stocks and that too over a long period of time and remember that time always act in the favour of the investors and here it acts in favour of PMS service provider.

Let us see this with an example.

Let's see the charges:

(a) Portfolio management services initial charges say 2% which is on your capital.

(b) Profit-sharing and let's say is 20% of your profit.

Now let's say that PMS made a profit of 10%

The initial charges of 2% are actually working out 20% of your profit as this initial 2% is on the capital

Add to it profit-sharing which says 20%

So, you are paying 20%+20% charges out of your profit which works out to 40% of your profit

Thus you are only left with a
6% return and that too for telling those PMS guys to invest in HDFC bank for the long term.

Instead, concentrate on day trading tips or Bank Nifty option tips and capture your profit everyday in the intraday market as profit in hand is the actual profit.