Posted On Friday, Jun 24, 2011
In an interesting editorial, TIME magazine put together a list of New Year resolutions that are most often forgotten. It was interesting to note that amongst the list of 10 resolutions, "Get out of Debt and Save Money" was a decision that many resolved to adhere to, but ended up forgetting all about.
While the time for New Year resolutions has passed, it's never too late to make your investment resolutions. Since, any investment resolution you choose to abide by will refer to your hard earned savings, its better to be late than never get to it at all.
Today, we follow a demanding lifestyle, which makes financial discipline a rare quality. Much needed financial discipline would require some restraint in terms of curbing expenses and religiously setting aside a fixed amount of money each month to invest. And, as it is with New Year resolutions, saving and investing, both require tremendous amounts of dedication and commitment. Investing right might appear slow since you are expected to have a long term outlook, but when in doubt, do remember that the slow and steady always wins the race.
So, half way into the year, here are 5 important investment resolutions that you could start with right away. Who says you need January 1 to make a change? Start Now...
Resolution # 1: I Will Save More Immediately
If you want to begin investing, you must begin saving - Right Away. A penny saved is a penny earned, so do not wait to start saving next month onwards. Simply invert the current approach you take towards your savings and expenses: Delay your expenses, Save on an impulse! So, no matter how tempting it may seem to purchase the new Z series mobile phone or the extra high pink stilettos, remember you always have an option - Tell yourself, "NO".
Resolution # 2: I Will Not Be a Victim of Poor Financial Advice
Every piece of advice is not necessarily good advice. Understand your own investment behavior and financial goals, and learn to question the advice you receive from your financial advisor. Never get intimated by the fancy jargons that financial professionals use. Worse than having an intermediary sell you a financial product because it fetches them more commission, is getting sold a financial product that doesn't meet your financial needs at all. So, don't fall prey to poor financial advice. Choosing a financial advisor is like choosing a spouse! Because just like your spouse knows every detail of your personal life, your financial advisor has access to all the intimate specifics of your financial life. So, before you sign the dotted line, ask your financial advisor all relevant questions.
Resolution # 3: I Will Not Invest Without Reading
You have already begun well - by reading this article! Whenever you plan to invest in a financial product, gather complete information about it. Read about its investment objectives, learn about the team managing it and study its past performance to make sure they suit your ideals. You must also consider the principles that the firm stands by. Strong business ethics can play a major role in difficult times. Investing is not taking a leap of faith. Do your research thoroughly to avoid emotional errors while deciding to act on an investment plan.
Resolution # 4: I Will Be a Disciplined Investor
Discipline is the key to sound and healthy investments. Remember when you, as a child, used a piggy bank to save money? The coins you dropped into the piggy bank were miniscule in value, but they teach an important lesson in financial discipline - Save Small, Save Regularly. Today, this very approach applies to your financial well being. With volatile markets and high spending habits, it is advisable to make small investments regularly and systematically rather than a large investment all at once. When you invest regularly, you reap the benefit of compounding. For example, if you plan to save Rs 2,000 per month for 10 years. Your total saved amount thus would be = Rs. 2, 40,000. Now if you assume a rate of return of 12% per annum, after 10 years you stand to gain Rs. 4, 50,071. That is a difference of Rs. 2, 10,071! How did it amount to that? Simple, your savings used the power of compounding to transform into wealth. Even, Albert Einstein said, 'The most powerful force in the universe is the power of compounding'. Do you still need an incentive to discipline your savings?
Resolution # 5: I Will Be Patient
Investments can fetch amazing results, only if you have a long term outlook. If you want to grow your wealth, then you must be patient. Don't be in a hurry to book small profits. Instead, stay invested for longer so that you can beat inflation and market fluctuations. Short selling is a common mistake that can ruin your investment portfolio. Don't get worried about the ups and downs of the market either. Stand by your resolution to be a patient investor, than switch your investments at the slightest uncertainty, which could cause you to lose all your savings and gains.
There are no shortcuts to success. So, even if someone proposes a 'Get-Rich-Quick' tactic, do not let yourself get cheated into it. As India's first and only direct-to-investor mutual fund, Quantum does not shoot from the hip - we prefer to spend more time on research and process, so that we can give our investors products that are simple to understand.
As you begin to focus on investing in the right way, use these resolutions to help you stay the path. Save now, for there is no tomorrow to make up for the lost time. Be alert while taking investment decisions and don’t get fooled by distributors. Remember to read thoroughly about the company and its philosophy. Be a little strict with yourself and bring in some discipline to invest regularly. Finally, be patient and watch yourself turn these small resolutions into big dreams within a few years.
The views expressed here constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. This document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The Sponsor, The Investment Manager, The Trustee or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.
Get In Touch
Take small steps in financial planning to achieve big dreams! Start your investment journey today!