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Dear Woman: This Navratri, take these nine steps to shore up your money matters


We can’t control market behaviour, but we can define our risk appetites exactly in line with our financial status.

Navratri represents the nine days and nights preceding the festival of Vijayadashami, better known as Dussehra. What better opportunity than this festive time for women to take stock of their financial priorities.

Women are naturally adept at multitasking and inherently astute at decision making. They are now playing a pivotal role in financial decision-making in terms of earning, spending, saving and investing, whether as professionals, entrepreneurs or homemakers.

Here are nine key points on the eve of Navratri to help women investors steer the larger cause of their financial independence and prosperity through wise investment decisions. May the nine forms of the Goddess Durga bless them with substantial and sustainable wealth.

Put investment in perspective

Investment is about maximizing returns and minimising risks and is a function of prudence and patience. Once we put the need to save and invest in perspective, we capture the essence of key investing paradigms, tools, and techniques, thereby making the most of the investing avenues and instruments. We can’t control market behaviour, but we can define our risk appetites exactly in line with our financial status, potential, and aspirations. More often than not, investors themselves have risky temperaments but blame their blunders on the financial instruments.

Steer clear of emotion-led investments 

Wisdom alone helps us break the vicious cycle of earning and spending that continues unabated at the cost of saving and investing. Reckless investing based on an emotional pull leads one to a vicious cycle of financial doom: lack of knowledge leads to indiscipline, which in turn makes one vulnerable to ​ mounting debt and the lure of quick money schemes. At times, the glitter around a product can shield the inherent risk. Thorough research can help separate the chalk from the cheese.

Define your safety margin

In this era of perpetual uncertainty and near-fatal disruptions such as COVID-19, emergency funds have assumed monumental importance. Arrive at the exact amount to be set aside per month after taking stock of your earnings and expenses, and debt like loan EMIs and credit card dues. More importantly, ensure the liquidity of the emergency fund to enable fast withdrawals when required. A fixed deposit with short-term lock-ins is a good solution that will earn you interest, without compromising on liquidity.

Don’t undermine the need for insurance

Life insurance is necessary protection for you and your family. Given life’s unpredictability, it is important that you ensure the well-being of your near and dear ones through two forms of insurance – life and health. The former protects you from the vagaries of life, and the latter prevents unwarranted expenditure in the event of a medical emergency. Never commit the cardinal error of mistaking emergency money for insurance. Both serve different purposes and both are indispensable.

Set goals before you seek to score them

After you arrive at the investible funds after defining your emergency fund and insurance needs, it is important to define your short-term and long-term goals, which in turn would define your investment goals. In the context of equity, this effort will help you define:

-Investment Focus: like Growth, Income, Value, Cyclical, Small cap, Mid cap, large cap

-Investment Avenues: like direct stocks, Portfolio investing, Mutual Funds (MFs), Exchange Traded Funds (ETFs) and other avenues like Fixed income instruments, currency, crypto, real estate, or gold

-Investment Venues like Nifty, BSE, international exchanges and the like

Respect the value proposition of all asset classes

‘Never put all your eggs in one basket may sound like a cliché, but it helps you maximize wealth and minimize risks. No source will give consistent returns all the time but together they will balance your earnings and deliver better results. Over the last 20 fiscal years, different asset classes like equity, debt, and gold have outperformed each other at different times. A prudent selection of investments diversified across each of these asset classes would enable us to not only capture the peak performance of all asset classes but also reduce the overreliance on the specific asset classes. Equity stocks, MFs, and ETFs can be supplemented by fixed-income instruments like FDs, PPF, ULIPs, and Bonds. This blend of debt and equity will combine growth and stability for you.

Put Equity in perspective 

When we talk equity, we must grasp the difference between risk and volatility. Risk denotes the uncertainty of investment returns emanating from a host of factors including interest rate fluctuations, political uncertainty, credit risk, inflation, liquidity crisis and the like. Volatility, on the other hand, denotes the variations in investment value over time. This variation is not a risk if your investment is fundamentally strong. Equity investments done right help beat inflation and create long-term wealth.

Review is integral to investments

Investments are forward-looking, but they also call for learning from past blunders and changing situations. It is also important to take stock of investments at regular intervals. Over time, some of them may lose their shine due to various reasons while new themes may provide better value propositions by making the most of the conducive environment. The changing scenario may call for a portfolio reshuffle and revised asset allocations with fresh ‘buy’, ‘sell’, and ‘hold’ implications.

Engage a financial advisor

Good investing opportunities abound at all times, whether bull runs or bear phases. A competent advisor studies your life goals and helps you with disciplined and diversified investing in line with income profiles and risk appetites, making the most of market trends and sunrise opportunities.

Source : Money Control

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