Stop recycling
Instead, better your current
financial resolutions in 2011
financial resolutions in 2011
By Anil Rego
When New Year is round the corner, all of us are ready with plans that we wish to start implementing on January 1. Friends, relatives and the media bring news about the options available for shopping and vacations. People also make resolutions over their finances.
Sample these: a) I will use my credit card and my limit on the same judiciously; b) I will pay off my personal loan as soon as I get my bonus; c) I will start planning for my retirement next year; and, d) I have not been able to start that systematic investment plan (SIP) I always wanted to do, but next year I am going to start it for sure.
The pattern that we observe with New Year resolutions is that these are not new resolutions; these are things that were pushed under the carpet for long. Recycling is a wrong way to make a New Year resolution. Ideally, resolutions should be about something that you are already doing, but plan to make that activity much stronger in the New Year. For instance, I am going to increase my SIP from 5,OOO per month to 7,5OO per month. This is measurable and actionable.
The other important aspect of making a New Year resolution is to stick to the basics. This is true when you are making financial resolutions as well. Let us look at a few resolutions that you can undertake.
1. I will stick to my asset allocation
Asset allocation is an essential and critical element of a long-term financial plan. So, in the New Year, despite what the asset markets do, you should stick to your pre-decided asset allocation and, if appropriate ate, just make tactical changes. Getting swayed by market movements and trying to do too many things are among the biggest mistakes that people make, thereby ruining their financial health.
Sample these: a) I will use my credit card and my limit on the same judiciously; b) I will pay off my personal loan as soon as I get my bonus; c) I will start planning for my retirement next year; and, d) I have not been able to start that systematic investment plan (SIP) I always wanted to do, but next year I am going to start it for sure.
The pattern that we observe with New Year resolutions is that these are not new resolutions; these are things that were pushed under the carpet for long. Recycling is a wrong way to make a New Year resolution. Ideally, resolutions should be about something that you are already doing, but plan to make that activity much stronger in the New Year. For instance, I am going to increase my SIP from 5,OOO per month to 7,5OO per month. This is measurable and actionable.
The other important aspect of making a New Year resolution is to stick to the basics. This is true when you are making financial resolutions as well. Let us look at a few resolutions that you can undertake.
1. I will stick to my asset allocation
Asset allocation is an essential and critical element of a long-term financial plan. So, in the New Year, despite what the asset markets do, you should stick to your pre-decided asset allocation and, if appropriate ate, just make tactical changes. Getting swayed by market movements and trying to do too many things are among the biggest mistakes that people make, thereby ruining their financial health.
2.1 will read and fully understand the Implications of my participation in
any financial product
This is so fundamental a thing that people should just not follow during New Year but every single day of the year! Unfortunately, we do not invest enough time to simply ask relevant questions to the intermediaries, product sellers and ‘manufacturers’. Next time you are shopping for a financial product or if someone approaches you with a good offer to buy a financial product, sign only when you fully understand what you are buying.
3.1 will become aware of my rights as an investor
Just as we are careful when we buy consumer goods, why don’t we be more careful when we buy a financial product? That could be because We do not want to sound ignorant in front of the product salesman. The most basic aspect of buying any product is to be fully aware of its functionalities and your rights as a user. This applies to financial products as well. Be aware of what your rights and resolutions are; in case your situation changes.
4.1 will consult my financial advisor or appoint one
The world of finance is getting complex by the day. Ten years ago you had simple, easy-to- understand, plain vanilla products. Today is the day and age of futures and options and structured products! With the opening up of the economy and the consequent onslaught of a multitude of financial products, choices have increased and not always to the advantage of the retail investor. So if you are a serious investor, it is time to look for professional help.
any financial product
This is so fundamental a thing that people should just not follow during New Year but every single day of the year! Unfortunately, we do not invest enough time to simply ask relevant questions to the intermediaries, product sellers and ‘manufacturers’. Next time you are shopping for a financial product or if someone approaches you with a good offer to buy a financial product, sign only when you fully understand what you are buying.
3.1 will become aware of my rights as an investor
Just as we are careful when we buy consumer goods, why don’t we be more careful when we buy a financial product? That could be because We do not want to sound ignorant in front of the product salesman. The most basic aspect of buying any product is to be fully aware of its functionalities and your rights as a user. This applies to financial products as well. Be aware of what your rights and resolutions are; in case your situation changes.
4.1 will consult my financial advisor or appoint one
The world of finance is getting complex by the day. Ten years ago you had simple, easy-to- understand, plain vanilla products. Today is the day and age of futures and options and structured products! With the opening up of the economy and the consequent onslaught of a multitude of financial products, choices have increased and not always to the advantage of the retail investor. So if you are a serious investor, it is time to look for professional help.
The need for sound, unbiased and expert advise on financial products has never been greater. Appoint a financial advisor as early as possible.
5. I will be prudent with my spending
This is easier said than done. If we are a little careful in what we do with our earnings, we could make a big difference to our financial profile. For instance, spending within our means, using credit cards only when one has the capacity to pay off without availing of revolving credit facility, not over leveraging the monthly cash flow, are some of the things that can save on considerable interest outgo and add to your savings.
One can always do more, but you would have done well if you made the five resolutions mentioned above and stuck to it through the year. Happy New Year!
Rego is CEO and founder,
Right Horizons.
5. I will be prudent with my spending
This is easier said than done. If we are a little careful in what we do with our earnings, we could make a big difference to our financial profile. For instance, spending within our means, using credit cards only when one has the capacity to pay off without availing of revolving credit facility, not over leveraging the monthly cash flow, are some of the things that can save on considerable interest outgo and add to your savings.
One can always do more, but you would have done well if you made the five resolutions mentioned above and stuck to it through the year. Happy New Year!
Rego is CEO and founder,
Right Horizons.
Find Top Real Estate Agents To Help You With Your Next Relocation.Amazing Agents is a free and easy relocation free and easy,by connecting you with Top Real Estate Agents in your area. You choose from the best.
ReplyDeleteGeorgia SEO company providing the best SEO in Colombia.GA SEO Company give SEO in Bogota & SEO services GA, SEO experts in Columbia are known for positioning in search engines.
ReplyDeleteRoofing Companies in Roswell,Cumming, Dekalb, Douglasville, Lawrenceville, Alpharetta, Lilburn, Loganville, Austell, Lilburn, Gwinnett, Suwanee, Dunwoody, Dacula,Flowery Branch, Winder.
ReplyDelete