For me, 2021 was the year of financial education. Thanks to technology, I was able to reach out to a huge number of people across the country sitting at home. The sessions made me realise how keen people are to learn about finance and investments. So my wish for all for 2022 would be as follows;
1) Save more. Generally we advocate the 50-30-20 principle, which is to spend 50% of your income on needs, 30% on wants and 20% savings and investments. The last 2 years saw low interest rates on FD, increasing insurance premiums, inflation rates going to as high as 7.61% in October 2020 and uncertainty of jobs. I wish that people would save more, and make it 50% of income on needs, 30% on savings and investments and 20% on wants.
2) Be more consistent. As the saying goes, ‘Success doesn’t come from what you do occasionally, it comes from what you do consistently’, easier said than done. I know I need to practise this myself with regards to writing. However in investments, the best way do it is to automate it. That is do SIP -Systematic Investment Plan, once you give instructions to the Mutual Fund and the Bank, the investment amount gets debited from your account seamlessly just like your EMI. It automatically instils the discipline of consistent investing.
3) Be mindful. Know where you’re investing. In all the online sessions that I conducted this year, the one common thread was the lack of awareness of financial products and more importantly product suitability. People are investing based on either what their parents/friends are suggesting without knowing if those products suit their risk profile or take care of their financial goals. Randomly investing without a goal or plan will result in an inefficient or ineffective investments. Make every penny count. You make so much efforts to earn the money, take out the time and effort to understand the different investment products that are available and more importantly which product will help you achieve your goal. Don’t follow the herd and invest in products.
4) Have a financial plan. A goal without a plan is just a wish. So discuss with your family, find out their goals and put down a plan based on your risk taking capability and time horizons of the goals. Choose products based on this criterias. If required, seek the help of a financial advisor, they will help in preparing an effective financial plan and most importantly ensure that you don’t drift from the plan. A financial plan will serve as a reminder as to why you are doing what you are doing.
5) Keep fit. Finally, if there’s anything Covid19 has taught us then that has to be about fitness and a healthy lifestyle. Physical and financial fitness have a lot in common. Same rules apply, for e.g in case of physical fitness, having the right diet, choosing exercises that suit you and help you in achieving your goals (weight loss, inch loss, toning, muscle building etc.) and finally monitoring the progress. Similarly for financial fitness, decide your goals, choose the right products for investing and review your plan periodically to monitor the progress