The
end of a year is always a good point to reflect… reflect on where you want to go
and how you fared in the year gone by. As I started on a new life as a
financial planner and trainer, it has been my good fortune to meet many people
who have shared their wisdom with me.
One thing that came out in all my interactions,
in knowing where I have gone wrong and where others erred…was that random
actions and investments lead you nowhere.
The simple message for the new year - Be deliberate in all your actions
Don’t
let life’s waves lead you anywhere and toss you around. Even in your financial
life, be completely aware of what you are doing, where you are and where you want to go. Doing things deliberately
means an awareness of your resources and the outcome of your
actions.
A few people I met made investment decisions without any
deliberation, plan and at random, even on impulse - based on advertisements!!. This led to sub-optimal returns in a year
which has been great for investments. A very young
professional – 23 years old who saves about Rs 2 Lakhs a year was
conned by an uncle into taking a money back policy for Rs 54000 per year!! No
thought on what she wanted and what it entailed…
Being
deliberate means the following:
First, it means – Having
very clear goals and priorities:
There
is no point in having vague goals like “ I want to be wealthy”. Your goals and priorities
must be very clear. WRITE THEM DOWN. For
example, a student I met had stuck a big piece of paper on her desk – CAT 99 percentile. As she got up every morning, the first
thing she would see was her goal and every action during the day would be
aligned towards that goal.
To
reach anywhere in your financial life – first have goals and then prioritize
them. What do you want from your life and how much money will get you what you
want. Then comes the planning part…to
decide how each financial goal will be achieved.
Only if you know what
you do, can you be deliberate - Make an effort to increase your knowledge
It
is an investor’s responsibility to have
a basic understanding of investment products, know where to invest, for how
long, how much, and why. Even investors who prefer to stay with simpler
products should study their investment choices.
Many
investors don’t like to read stuff on finance but you should at least know the
basics. Today it is very easy to get a basic idea of financial products. Social
media is a great place to get knowledge of the instruments you want to invest
in. Having a basic understanding of financial products will help take informed decisions. You should
have the ability to understand some details such as tax and net returns
of every product. Working knowledge is good for a start.
Now, as
a consequence of the basic knowledge you have gained…
Invest only in
products you understand:
To
create wealth in the long run, you do not need to do anything stupid and invest
in products, schemes that your “more intelligent” peers do. As long you don’t make
blunders, you will find wealth building slowly but surely and all goals being
reached. As a corollary – Do you understand the returns you are getting from products like insurance and the costs you incur?? If you do not then simply AVOID such products even if you
brother-in-law assures you that all is great.
Being
deliberate means…
Maintaining discipline
in investing:
Automate
and systematize your investing. This is the best way to maintain discipline in
your investment. Keep a note of your cash flow – how much you earn, spend and
save and you will see that by just being aware of your cash flow, you are
doing the right things.
Being
deliberate means, after the investments have been made…
Periodically monitoring your
investments:
Being
deliberate means being aware of where you have invested and monitoring
regularly. It would be good to check if all the SIPs have gone through
correctly and how the investments have fared. Monitoring would mean that you.
So,
the final message – being deliberate in everything you do, including your
investments will work wonders for you.
Do
not hesitate to take the help of an advisor or planner if you wish to get a
better direction. There are people with knowledge around and you can certainly
take guidance. Taking such guidance would cost you a bit, but it is well worth
the cost.
Wishing
all a great and successful year ahead.
No comments:
Post a Comment