Published on Fri, Jan 25, 2008 at 11:56 | Source : Moneycontrol.com
Updated at Fri, Jan 25, 2008 at 18:26
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Life is a Marathon – Here’s how to plan for it
While planning for your life’s goals, it is important to remember, this is not a 100-meter race, it is a marathon. While 100-meter race is run for the speed, a marathon is all about endurance and stamina.
Running up the slope For those familiar with the geography of Mumbai can understand how difficult it would be to climb up the Pedder Road fly-over especially on the way back after running for over 14 kms in the half-marathon race. The beauty is in the perspective. Remember that the climb up the fly-over is followed by a climb down it. While you spend more energy running up the slope, coming down is a much easier part. It is the same in the world of investments also. Generally, an asset class, be it equity or real estate, that may go down substantially, has the potential to rise up also very fast. And that is where the old adage goes: higher the risk involved, higher the expected return.
Get into the rhythm Everyone will have a different speed at which one can run - whatever the distance. It is the rhythm one needs to get into, that allows one to cover the long distances. In the world of investments, the rhythm could be akin to one's ability to assume risks associated with various investment options. As long as one invests money in line with one's ability to withstand the price volatility or the uncertainty, the journey becomes smoother. And as mentioned earlier, the rhythm will help one achieve the goals.
The investment plan needs to combine one's risk taking ability along with the requirement to achieve the goal within the stipulated time. In the investment parlance, this is known as asset allocation, i.e. dividing one's money across various investment options. Asset allocation is considered to be one of the best-known investment strategies to help an investor achieve the investment goals without giving unnecessary hiccups along the way.
Enjoy the journey While one's objective is to complete the race and to that extent the goal is at the end of the distance, it is the journey that one needs to enjoy. Any discomfort or unhappiness will make it difficult to achieve the goal. If the investment portfolio is giving one sleepless nights, it would be a better idea to change the components of the portfolio or redo the whole plan. Even if one believes that the end justifies the means, the investments are made to achieve life's goals and hence life is more important than the investments.
Wish you all a very happy, healthy and wealthy 2008!
Get into the rhythm
