5 Basic Rules of INVESTMENT in 2023
The secret in optimizing the investment opportunity in 2023 lies in the ‘ME’ of investMEnt. Though our natural instincts sensitize us about the performance of the indices, but there are instances wherein smart investors have garnered profits by outperforming the market. We need to understand the opportunities the market creates for us, and diligently make the most of it with a right kind of approach towards financial and investment decision making.
The market can’t be timed or predicted, but we can definitely adapt some behavioral pattern now to get that edge.
Captured below are 5 of the basics attributes towards our investment approach, which may require a significant change if we want 2023 to reward us handsomely with our investments –
- 200 hours Vs 2 hours:
All of us work at least for 200 hours a month to justify our hard earned salary. Post our expenses we manage to save anywhere between 5-30% of our earnings every month. Let’s assume we saved INR 30,000/month or say 5000/month. How much time do we spend to figure out where to invest this money? Do we even spend 1% of the total time i.e. 2 hours a month of the 200 hours spent to earn the money into figuring out what are the right investment options to grow this hard earned money? The study shows the more time we spend, at least 5% (if not 10%) of the total time spent to earn the money, it will result in much better outcomes for our investments.
In 2023, start with at least 1% of the total time, gradually increases it to 5% of the time towards your investments and money management, to drive a much higher growth rate. Time is the best Investment!
- Know Your Money:
It is important to keep a track of the expenses. Though we are aware of the inflow of the cash, but most of the time, we tend to be carefree about our spending. Have you ever realized that cutting down the dining out expenses from INR 5000 by 50% and investing that INR 2500 through a SIP over a period of 5 years may accumulate INR2,50,000 (approx ERR 20% p.a)? This might take you closer to the fulfillment of financial goal like down payment for your dream home or car or your child’s MBA school admission?
Let 2023, be the year where you exactly know what you should spend, where you should save and what you should invest in. Knowing is Achieving. You should derive the maximum benefits out of your money. Money earns more Money!
- Understand your risk profile to Plan your Investments:
Another aspect to consider while making investment decisions is “understanding the risk appetite”.
It’s high time to realize that your investment should be in aligning to your financial goals, rather than a suggestion by your friend. Different people have a different approach towards investment. It’s important to define your objectives, understand your expectations, set an investment horizon & analyze your risk profile and then execute your investment decisions and not the other way round.
Remember the Golden rule of 80% Planning and 20% execution. Plan systematically, holistically and not in an ad-hoc fashion.
- Explore Options and Diversify with a Holistic Approach:
Spend time to understand the available options for investments like Mutual Funds, Equities, Bonds, Deposits, ULIP’s, Real Estate, Commodities, Gold etc. and opt for the holistic approach towards your financial life. A perfect matrix of Investments, Liabilities, Risk Management & Tax Management is an important aspect of that approach
Take advantage of appropriate loans to achieve our goals on housing, car etc., adequate life & health covers to protect our family in case of exigencies and smart tax planning to optimize the investment and tax avenues.
The more diversified the portfolio, the higher the potential of returns. Exploring with a holistic approach is an important Investment in itself!
- Continual Monitoring & Managing your Investment Portfolio:
Your investments (past, present & future) requires continuous monitoring and tracking. Ensure that, you make this an everyday ritual to glance through your portfolio performance, which can eventually improve the end outcome by 50%.
Also, keep in mind that the investments are for appreciation of your wealth. Don’t get emotionally attached to your investments and compromise with the returns.
For instance, if you have bought a house in Pune for investment, ensure you book maximum profits over the period of time and sell it when the market is delivering you the highest return rather than holding it for long term and missing out on the financial opportunities
Turn into a savvy investor in 2023. The job of money or investments is supposed to make more money, and just that. Money is value, keep growing it consistently!
Own your investments diligently in 2023. Take active charge of your finances and investments, depend solely on yourself for your growth.
Money requires accountability, no better than yours!
P.S. You can also explore 5nance.com to manage everything like a king in a couple of simple clicks while relaxing on your couch...
