They say that if you figure out money, life is incredibly easy. But unfortunately if you don’t, it is incredibly hard.
And that is so true.
You must have met people who have really ‘sorted’ out their financial lives and it shows in their personality, attitude and decision-making. And you must also have met people who are perennially in money troubles. There is something or the other… always… that is bothering them financially.
Obviously, there is something that both these set of people do differently from one another. There has to be…
A new financial year has begun.
And for us equity investors, with a new reality of tax on LTCG. Can’t help that now… 🙂 But I don’t want to be preachy here.
I just want to begin this year by highlighting few things that I feel many people ignore or need reminding:
- Are you in your 20s with no clue why you don’t have any money saved up even after having a good start to your career?
- Are you in your 30s with an unorganized mess of financial products that ensures that you never get the returns you thought you should get?
- Are you in your 40s desperately feeling helpless as you realize you are late in the wealth creation journey?
- Are are you in your 50s trying to make sense of coming retirement and wondering whether what you have saved up (and will save in next few years) will be enough for a decent retirement or you will run out of money?
- Or are you already having a big portfolio which you feel is not positioned to benefit from future growth or makes you feel vulnerable to various risks?
If you find yourself in any of the above situations, then one thing is clear. That something needs to be done. And who will do it?
The obvious answer is YOU.
Your money, your life, your responsibility.
No one can stop you from reaching a financial state that you really think you deserve. But no one will hand it to you on a platter too. You need to acknowledge the problems, take action and get back in control of the situation.
It is important to talk a bit about ‘urgency’ here… or rather perceived lack of it.
In many people’s case, it doesn’t seem urgent enough to address money issues immediately. And this lack of urgency pushes them to keep postponing what rightfully needs to be done quickly. But remember that us humans are full of unpredictable emotions. Never fully expect that we will operate with 100% reasonability and practicality when the time comes for us to act urgently. That is not going to happen. We will be arm-twisted by the situation and we will end up making mistakes.
On the other hand, many people are already aware that there is a real ‘urgency’ to do something asap. But unfortunately, they get lost in the forest of too much information. Faced with too many options they become overwhelmed and unable to take the right call.
If your financial life seems to be in a similar situation then remember that it’s a 1000-piece jigsaw puzzle and if you don’t know where to begin, then go for the box – i.e. find the picture on top of the box! 🙂 From there on, it’s easier.
When you know what you are aiming for, you can take actions accordingly.
For most people, identifying their real financial goals and taking the super easy approach of goal based investing (GBI) can work wonders. And I am not exaggerating. Initially, it might seem too simple but believe me – this approach alongwith discipline, pays back linearly initially and non-linearly later on. You will one day thank yourself for deciding to find out your financial goals, clean up the mess and get going.
They say that if you commit to nothing, you will be distracted by everything.
And that is what happens with most people who randomly invest here and there for wrong reasons in wrong products on wrong advice. GBI can and does help such people.
You can take up this GBI approach yourself or engage an advisor.
Engaging an advisor is not mandatory for everyone. But if you don’t know what is right for you or not, then it is very important. It changes the perspective you have about your investments and financial goals. And this change in perspective shifts your focus from worrying to options. And that changes the whole game. You begin to focus on solutions.
For people with larger portfolios that strategy necessarily has to be different.
These are people who are not worried about whether to start their SIP or stop it or how to pay for next house purchase, etc.
These are people with big portfolios that need to be protected from market’s unpredictability and also be positioned for decent growth. For them, it makes sense to engage capable, trustworthy and sensible investment advisors. Too often, advisors don’t want to be the deliverer of bad news. The best advisors should manage client’s expectations properly and bring them back to the ground if necessary. Bad opinions of advisors can be very costly. And I am not talking about the fee. Rather it’s the impact of their advice on client’s investment portfolio.
That’s enough from me. 🙂
Start of a new financial year is the perfect opportunity to review your financial situation and seek out help if need be. Remember tax planning is not investment planning.
Don’t wait until the end of the year to once again begin your cycle of financial repentance.
Between the great things we can do and small things we will not do, the danger is that we shall do nothing.
Don’t let that happen. 🙂
Decisions help us start. Discipline helps us finish.
A new year has begun… take a decision and use it well. Discipline will soon follow when you realize the potential of your decision.