For an investor, change is a constant factor, and hence, what was good in the year 2000 need not be good a decade later. Similarly, what helped the investor make money in his 30s need not be replicated when he turns 60. There are different ways of managing change and adherence to these simple steps will help an investor in change management.
Here are some tips:
Re-visit goals at regular intervals
This is probably the easiest thing to do in finance management as we all know what we need. For instance, when we begin our career life, we are happy with a single car and a nice little flat/house. The necessity for both grows in size with age and more importantly, it is an affordable dream in many cases.
However, funds for them needs to be planned and hence, it is important to update the goal sheet at regular intervals.
Enhance savings and investments
An adage about savings is 'you should always save an amount which is difficult to manage'. However, the money set aside towards savings or investments, doesn't pose a challenge beyond a point. Instead of feeling good with the savings amount, it helps if you keep stretching the limit to the maximum possible at all times.
This is possible only when money inflows and outflows are reviewed at regular intervals. A review once in 3-5 years is an ideal timeframe for all categories of investors.
Re-assess your risk profile
The risk-taking ability of an investor is invariably related to his age, his financial comfort and his goals. Since all three components change over a period of time, we can safely assume that an investor's risk appetite too needs to be reviewed at regular intervals. In many cases, the risk-taking ability is dependent on the fund needs and period at the disposal for the investor.
Hence, a regular review of the investment portfolio is a necessity to align all factors to build the needed corpus to meet financial requirements and investment objectives that have been set.
Asset allocation
The implementation of these three factors should take care of most of the concerns of the investors as they provide the much-needed purpose for wealth creation, means for achieving it and more importantly, help in building the right investment pool in line with the needs.
However, wealth is not created merely by increasing the contribution but by boosting the overall portfolio returns. Here, the word 'overall' is the key as it focuses on the portfolio returns rather than product returns.
Hence, an investor needs to build a basket of products rather than focusing on a single scheme or instrument while building wealth. This reduces risk and also ensures better asset allocation which is the key to managing money. The exercise again comes with the usual caveat. Change the basket mix according to the financial goals and changing times.
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Source : ET
At SAMPARK, we provide financial advice and distribute various investment products with the most efficient & widest range, customized specifically to your NEEDS..@ Whether you are keen on small investments or playing it big, We provide financial advice and distribute various investment/financial products with the most efficient & widest range, customized specifically to your NEEDs.
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