10 ‘Ravanas’ you should burn this Dussehra to get rich fast, make your finances healthy
Happy Dussehra 2021: An advice to remember especially when someone has just started out! Following a trusted expert or paying heed to market cues on future swings from a market leader, can help an investor to be watchful.
Navratri brings us to that time of the year where light triumphs over darkness. Nine days of praying and celebrating the nine avatars of Maa Durga which concludes with Ravan Dahan. The ritual of burning effigies of demon king Ravana, Meghnath and Kumbhakaran representing the victory of good over evil. This year, as we burn Ravana on Vijaya Dashami, we should also consider burning some bad financial habits to get rid of losses and bad decisions.
Let’s have a look at 10 such vices to do away with for being a successful investor.1. Mirroring investment portfolios
The first in the list of poor money habits is replicating other people’s decisions without considering whether creating newer strategies might work out better. When making an investment portfolio, we should consider our own risk appetite, life goals, and needs and draw a plan to move towards it.
2. Investing without a goal
Goals are important. Not only do they become the motivation to persevere, but they also help us plan for the future. Before one sets out with investments, he needs to consider what he is investing for? Based on the situation, are you investing to generate a healthy surplus which can double up as your child’s education fund or an emergency fund? Clarity in goals and monitoring developments in goals which may change with time can help in making adjustments to one’s investment portfolio.
3. Mindlessly spending
We do not want to hold back on life. We earn, after all, to live! However, to spend it all on a whim is unkind to an individual’s future. We recommend not spending more than 30% of your salary, and this bracket includes essentials like rent, food, etc. While there can be exceptions for anniversaries, birthdays, festivals, etc., – it can be compensated with lesser spends in the upcoming months.
4. Ignoring asset allocation while investing
The idea of making big entices can be thought of as beginners, but it is wiser to diversify. This gives a better chance at avoiding risks in case all goes downward. Whether it is about investing in physical assets like gold and real estate, or investing in financial assets like shares, mutual funds; always divide lump sum investment amounts within brackets of wisely chosen instruments. Keeping an eye on all the instruments invested in is crucial too.
5. Keeping a check on both short-term and long-term goals
While short-term money goals can often change, and there can be expenses that need a huge amount like that of a trip overseas; however, the allotment of investment towards long-term goals should not change as it determines future stability. For instance, if you are looking to purchase a property in a few years, then the investments need to be in line with the timelines.
6. Not discussing finances with family members
Life can be unpredictable, and in an event when you are not able to access your investments, which might be needed for emergencies, your beneficiaries need to know how to access them. Where to look? Who to call? Who is the nominee? What shares have been bought? What MFs? What is the kind of return expected? Make sure your family is well-informed!
7. Not holding an optimal insurance cover
By now we all know that life is highly unpredictable, and we have to be prepared to face the adversities. While we hope we never have to use our insurance, having one helps to avoid paying a huge financial price. Not getting an insurance policy and leaving your family and yourself in vulnerability is definitely considered as a vice.
8. Not creating an emergency fund
Having an emergency fund does not mean setting up a savings account necessarily; it just means keeping your money at places where it is safe, growing, and withdrawable. Any long-term investments like that of a retirement fund may offer you long-term prospects but do not offer liquidity. For this purpose, the need for a diversified folio with liquid-able instruments comes into play. Such funds could be touched only in times of emergencies.
9. Being impatient and doubtful of your investments
The market is constantly fluctuating on the indices, and hence some shares and funds can go down the graph unexpectedly. However, the same can pick its pace with time and hence, patience remains to be a true virtue in the world of investments. While you do not have to stay glued on your screen to map the path ahead, monitoring the performance of the instruments is essential. When it comes to stocks, monitoring the market opening and closing rates to review the performance can help in judging the growth of a share. Being patient and positive can churn desirable returns.
10. Not paying heed to sound advice
An advice to remember especially when someone has just started out! Following a trusted expert or paying heed to market cues on future swings from a market leader, can help an investor to be watchful. In times of confusion, it is recommended to turn to a market or financial expert for help to find clarity. While decisions need to be personal, taking insights and observing the market trends can lead to thoughtful actions. These are some of the ways one can break free from financial mistakes and direct towards a growing and healthy record of finances.