You may have heard of the ‘cancel’ culture. It means calling it out loud. The idea is to make a loud noise to spread awareness and then end a culture that causes fellow human beings to suffer. It could also mean realising things that are wrong around you and changing them.
There are so many things wrong with our attitude towards money. It is time to cancel and call out those habits. As the year draws to a close, you need to usher in a change that would set ground rules for the way you manage your money.
Your decisions
When planning your financial future, it is a good idea to take professional help. A financial advisor will be the first team member that you would create to discuss money-related issues. You may have delayed that decision for any reason. It is time to act on it quickly. Your family members can be other people in your investment team. If you are not into finance, it is good to discuss the merits of all possible investment avenues with the team.
Personal finance includes your bank accounts, insurance, tax planning and investments. If you have too many bank accounts, you may want to consolidate your savings into two or a maximum of three bank accounts. Check nominations and ensure that they are done. The same holds for your investments. You must discuss your insurance needs and check if the health insurance plan is adequate. A similar review is needed for your life insurance. Your life insurance must comfortably cover any liabilities your family could face in case something happens to you. In short, operation clean-up must be a regular feature for all things finance. Your financial advisor would help you organise your finances better.
Falling for biases
Our biases drive our investments very often. You cannot follow others with investing just because someone else was lucky to be there at the right time. Many of you have begun trading in the stock market. A lot of you have been courageous to even go after cryptocurrencies. You made such moves because someone else you know did it. That is the worst reason to put your hard-earned money. You need to understand that financial markets move in cycles. Profitability of companies influences stock markets. Fixed income markets move on the back of the inflation and interest rate trends. You need to keep yourself informed and make efforts. You need to cancel on the lethargy that makes you shy away from finance.
Being responsible
Your investments should follow the path of your dreams. You need to convert those dreams into financial goals. That ensures that your investments have specific directions. It does not matter if someone else makes a quick buck. As long as you are on your path towards your goals, you should not let short-term trends bother you. When investing in the stock market, the onus is on you to make the most of the information available to you. There is a lot of internal and external environment that influences equity prices. Indian shares have outperformed emerging market peers in 2021. They may or may not repeat the same performance.
Equity prices today are linked to expectations of profits for tomorrow. Sectors like consumer technology, financial services, healthcare, technology services, infrastructure would continue to see new investment each year. Companies in these sectors are likely to do better than others. Your asset allocation will play a critical role in helping you reach your financial goals. Those could be to retire early or start a new business.
You may dream of owning a home in a big city or buying another one. All that needs you to be responsible. You need to cancel the habit of blaming others. Nobody else can hurt your ability to make adequate gains if you are saving and investing regularly. You may buy shares directly or indirectly through mutual funds. As long as you invest in companies with solid financials or mutual funds with a consistent track record, you will march towards your goals. The trick is to give your money the time it deserves to grow.
( The author is editor-in-chief at www.moneyminute.in)