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This festive season, get rid of your fear of numbers and losses 

With reports of  low auto sales, unemployment, low GDP growth etc, a certain paranoia exists among the millenials about the country's financial structure.

Published: 27th October 2019 09:11 AM  |   Last Updated: 27th October 2019 09:11 AM   |  A+A-

Shoppers browsing a market, especially set up for Diwali in New Delhi

Shoppers browsing a market, especially set up for Diwali in New Delhi | Arun Kumar

Festivals bring togetherness that leads to moments to cherish. As you look to meet up with your friends and family, you may also want to review things in your life. A lot of those things in your life are related to the way you manage your finances. Your money needs your attention even if you believe that you are a non-finance person.

Fear of numbers

The first demon in your head is about numbers. For many, finance is all about them. A lot of the financial press talks in data points. So a newspaper article will talk about car sales slump or television channels will debate the GDP growth rate for hours. You know that there is some connection to your money, but the path is not clear. A simple way to tackle the ‘fear of numbers’ is to concentrate on stories behind those numbers. That way, you would be able to connect the dots. The most important thing for you is to figure out the optimal level of data you need to know.

If you are a non-finance person but interested in your financial well-being, you need to know that your money in the bank will earn an interest in line with the inflation rate. You need not concentrate on the total consumer price inflation rate every month or details of the repo rate set by the Reserve Bank of India used by economists and analysts. 

You need to be aware of the fact that the overall prices of all goods and services you use are moving in a particular direction. If prices are trending up, then interest rates are likely to remain firm. If prices are trending down, then there is a good chance that your savings or fixed deposits may also trend down.

As someone not used to numbers, you may have already signed up for an insurance policy from a friendly agent. You probably have also heard or signed up for systematic investment plans or SIPs promoted by mutual funds. Every month, you are investing a portion of your savings into things that you believe are investments. If we assume that you have an advisor, who is giving you the right financial advice, it is enough for you to know about the portion you are allocating each month towards your investments. You must ensure that you assign a higher amount every month. Each time you do that, you must pat yourself on the back.

When you regularly do this for the first few years, you remain unaware of the value of your investment. Once again, assuming you have got the right financial advice, you may be surprised with your investing achievement over five years. At this point, you think about the concept of ‘higher returns’. You look for investments that could generate a better return each year. Your primal fear of numbers will not allow you to take many risks with your investments anyway. 

You may decide to allocate more money to equity-linked assets based on financial advice. You may wonder about the timing of your investments — a lot of ‘what ifs’ may start to hover in your head. You may begin to worry about a potential loss in your finances.

Fear of loss

For most of you, the root cause of the fear of loss emanates from the fear of numbers you see. Instead of concentrating on absolute numbers of the economic growth or the stock market, you need first to understand that we go through economic and market cycles that follow one another. Your focus is on creating long-term wealth for yourself. Hence, your worries are confined to the trend in inflation and 
interest rates. 

As a thumb rule, you can decide that every year, my investments should generate an average return that surpasses the consumer price inflation rate comfortably. And from the aspect of the time-value of money, you might  want to ensure that you have enough money to pay for your higher expenses later. 



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