Investorshala

‘DIY’ or ‘Do It Yourself’ have been a trend since quite a while. Whether it is about making a piece of craft or decorating a corner of your house, DIY is the go-to search word for almost everything. You might make a little mistake while cutting a piece of paper, and that’s a manageable mistake as you can redo it or resolve it with some patchwork.

However, DIY in financial management may result in major financial problems that you may only realize later. Here are the reasons why you shouldn’t opt to manage your finances using the DIY method.

You’re treating investments as transactions

With an influx of fintech businesses, making investment has surely become easier as you can invest, redeem or review at a click of a button.

Investment is not a mere transaction. We repeat. Investment is not a mere transaction. Just because you can see an investment offer and an easy payment gateway doesn’t mean you should invest in it. It is a decision you take with a plan in hand considering your goals, lifestyle and your responsibilities. Are you sure you’re considering all of this while investing?

You are not saving/ investing enough

You’re surely making investments and managing it yourself, but have you considered if they will be enough for you?

For instance, one of my acquaintances recently mentioned that he was running an SIP of Rs.50000/- a month (sounds decent, isn’t it?). If I tell you his take home was Rs.3.5 lacs per month; do you still think its decent? No. And we all know why because he was just saving 15% of his monthly income. Now that we are in the midst of the crisis, he regrets for not saving enough when he had the chance to do so.

When one has enough disposable income in hand, it is easier to set money aside for investments. While we are doing it ourselves, we often forget this!

Quick withdrawal from financial goals

When you’re your own judge, you might not be rational too. In times like today, people who were managing finances on their own are clueless i.e. if they should stay or withdraw.

To avoid further risk, most are withdrawing their investments on seeing the lowering value of their portfolio. They think they’re on a safer side, without realizing that they’ve in fact paused their financial growth.

DIY is great, but not for every aspect of your life

If your stomach pains for more than a week, do you wait for it to cure itself or do you consult a doctor? Taking care of your money is taking care of your financial health. For that, an advice from a financial expert is essential. Without a professional advice, we can make financial mistakes whose burden will be felt only when thing aren’t going well such as times like today.

Consult a financial advisor today who can help you analyze your income, expenses and goals and accordingly chart out a financial plan for you. Proper planning can save you both time and money.

Be it the bread-earners of the family, the think-tankers of the businesses, or the policymakers of the governments, everybody in the world is currently clouded by the thoughts of survival and financial sustainability.

Today, the financial crunch can be felt by each and every living person in the world and is bringing to light the need of budgeting i.e. how to manage expenses with the limited income that we have today!

The post-COVID-19 period will surely bring with it, a recession and slump in the overall market, leading people into a fight against another crisis, if I dare say, a financial pandemic. Yes, it can be felt already considering the layoffs or business shutdown that we are seeing today. However, the good news is that if we take precautionary measures now; we might be able to sustain it to some extent. Thus, I decided to talk about 3 things that we should be considering to prepare ourselves for the financial crisis that waits for us down the road.

What is Budgeting

Recently, before the coronavirus spread, I was speaking to a young man (35 years old), who was working for an MNC in Noida. While we were discussing planning his finances, he said, “Ashish I know from where my money comes in, but I don’t know where my money is going out. ” To which I responded, you know what it’s a typical case of total budgeting failure, and may lead to mismanagement of finances. And before we delve into how much you should save for your financial goals, let’s understand what budgeting is-:

Budgeting is a process of creating a plan to spend your income wisely. Budgeting is nothing but balancing and tracking your expenses to ensure you are not overspending.

What You Earn Today Must Pay for Your Needs of Today and Tomorrow

Now that we know what budgeting is, there’s one thing we often forget – The money that we earn today is not just meant to pay for today’s expenses but also to provide for tomorrow’s expenses. Be it salary or profits, first take out the money for all your needs. When I say needs, it is not only for immediate but for the future needs also. If you spend all your income today, there’ll be none left for the growing needs of tomorrow like retirement, children’s higher education, contingency funds, etc.

 There’s No Thrill in Living at the Pay-Check Edge

If you are amongst the 40% people who are meeting ends and living on pay-check to pay-check, coronavirus has come as the harshest reality check.

If you are tensed about catering to your essential needs for the 21 days of lockdown, have you ever thought about how you will be able to survive your 21+ years of retirement? While optimism and being positive is a good trait, thinking that you’ll survive it when the time would come, is sheer arrogance.

Moving forward as the world contains this pandemic, it is necessary for people to reconsider their spending habits. The implication here is not to live poorly or in misery, but a lesson of living frugally must be learned, now more than ever, and avoid the strain of personal debts and EMIs in the times to come.

Here on – Take budgeting seriously or there’ll be serious consequences

During this lockdown, a message is going viral, “Jeevan yaapan ke kharche toh behad kum hai, sirf lifestyle aur dikhawa hi kharchila hai,” meaning, the cost of living is indeed low, it’s the lifestyle and pretence that is expensive.

In the period of lockdown, did it occur to you that – you are constantly trapped by the unlimited wants of the material world, trying to set an unrealistic example of your life? The quest to look better in front of relatives, peers and people, in general, have led to even the richest feel insecure with all that they have. As rightly said by Mahatma Gandhiji “The world has enough for everyone’s need but not everyone’s greed.” While you can indulge in luxuries and wants, you must not place them above your current and future needs.

Summing it up: Stop Wishing and Start Budgeting today

Taking the first step is the hardest things to do. But as they say, the journey of a thousand miles starts with a single step. What better time would you get than this to rethink your financial planning and expenses. Take one step a time, do it not just today but consistently, every day.

• List down your expenses
• Categorise them into discretionary & non-discretionary expenses
• Eliminate or reduce discretionary expenses
• And follow the plan consistently.

We have entered a world which was never seen before, never heard off and never thought of.  Carona is definitely a big issue which we all have to responsibly deal with. With markets hitting lower circuits and investors existing in Panic with deep losses,  questions are being asked – what should I do as an investor.

Let’s answer this from another angle. You have invested in a Restaurant or a Gym or you are running a hotel.. your business is totally shut… There are so many other businesses which are totally shut. You don’t know how long

it will take to open and come back to normalcy. What would you be doing now? Would you close down your business or wait till the dust gets settled. Most of you would say WAIT…

Let me take another example…You have a piece of land or flat as investment…with all that is happening… the value of it would have also fallen… gold has fallen, silver has gone down… what are we doing, are we selling them?  No… we are just waiting ….. let the dust settle.

Point is if we assume that the world is going to end -then there is no relevance of investments at this point in time. But if we assume – the world is going to restart again after a brief pause, them just hang on:

At this time three R’s are important

• Remember this too shall also pass 
• Remain calm
• Be Responsible citizen

There is nothing new under the sun….  We had a crisis earlier also:

• 1984  Prime Minister of India was assassinated
• 1987  Stock market fell the most. that fall  was bigger than this fall
• 1991 India was literally bankrupt
• 1992 Harshad Mehta scam came out when the stock market tumbled more than 55%
• 1997 Ketan Parikh scam shocked the market
• 1999 Kangil was happened
• 2000 Tech Bubble busted again markets  went down over 60%
• 2001 WTC attacked happened in USA…it was  assumed that World War III would start
• 2008 global financial crisis hit the world hard .. Markets went from 21000 to  8000 (62% Loss)
• And now it’s 2020, where Corona which is a health issue is hitting the market hard. Today the world is united to fight. This crisis once over life will climb to normalcy.

During such a crisis, only big rallies have come. In May 2009 Sensex rallied over 18% in just one day. Yes, your patience will get tested, Confidence will shake many times, but you still have to believe on one fact humans have fought many battles earlier also and have not only survived but also thrived from Crisis.

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