Have your Financial Plan in place – Famous saying, “Failing to plan is planning to fail” the most common reason why people fail to achieve their financial goal is the lack of planning. Imagine going on a trip without proper travel and stay arrangements. We always pre plan the trip to make it enjoyable, then why not we plan our financial journey? Make a proper financial plan and follow it to achieve your financial goals.
Always have your emergency plan in place – You must have heard the story of Grasshopper and Ant, how ant store her food for the rainy season and how grasshopper failed to plan and died due to hunger. There is so much to learn from our surroundings. Life is full of uncertainties, Job Loss, accident, medical emergency all these things require a backup plan. It is always advised to maintain a fund of 6-9 months of expenses for emergency.
Have Realistic goals – Planning helps in converting dreams into reality; however it is often seen that people give more priority to their wants and not to their real needs. Realistic goals are what we need. It is really important to set only those goals which you can achieve. Setting those goals which require extra efforts will only effect your overall planning.
Don’t chase return, chase your goal – Very often people ask about returns while investing into a particular product, but they don’t understand that while investing for a particular goal asset allocation is more important rather than the returns. It may happen that the best performing fund may not give you the expected returns in future, but at the same time a mix of average performing funds of different asset class may help you to reach your goal in future.
Re-balance your portfolio when needed – It very important to rebalance the portfolio. Goals can be of long term and short term. Long term portfolio can have more of equity exposure and slowly while approaching towards the goal, portfolio can be rebalanced at several intervals shifting focus towards debt. While short term portfolio can have more of debt and less of equity. People get emotionally attached to their portfolio which leads to more and more rebalancing. Rather they should try to focus on goal not on speculation.
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