Mere Khwaabon Mein Jo Aaye
2| Lata Mangeshkar- She made it to the list of top searched personalities very quickly after the news of her hospitalisation and ill health became public. She was later dscharged from the hospital on December 8. (Image: Reuters)
Aake Mujhe Chhed Jaaye
Use Kahon Kabhi Saamne To Aaye
Admit it, it’s not just Kajol dancing her way around, addressing her unknown suitor to the magical voice of Lata Mangeshkar, but also you, albeit secretly, to your unfulfilled dreams-be it of visiting your dream destinations of Pondicherry or Paris, getting your hands on the latest iPhone or simply pursuing your further education from the institute you aspire to!
But just wishing for them to come true isn’t going to make them happen, right? For them to turn into reality, you need more than just hoping! If you’re a complete beginner as to how to start managing your finances to accomplish all your dreams for them to come “saamne”, head to some sagacious advice from Lata Tai, the queen of melody, who celebrates her 92nd birthday on September 28, 2021. Read on.First, start Budgeting, the 50/30/20 way!
Kal ke andheron se nikal ke
Dekha hai aankhein malte malte
Ho phool hi phool zindagi bahaar hai
Tay Kar liya
Aaj phir jeene ki tamanna hai
If you’ve been spending all your money recklessly, without a thought for savings and investments, stop right there! This is your clarion call, so drop everything and make a budget for your financial health and well-being, carefully categorizing all your incomes and expenses. A good rule of thumb for a solid budget is to follow the 50/30/20 way!
Say you earn Rs 40,000 per month. 50 percent of this amount, which means around Rs 20,000 will go to paying for your needs and your absolutely essential utility bills like rent, food, electricity, and more. These payments are non-negotiable, so first and foremost, carve these funds from your income.
Also, it’s easy to get swayed away and club our wants and needs together, just to justify that not-so-necessary, expensive purchase. So, before you dip in your funds for buying something, assess your desire and always ask yourself if it adds any genuine value to your life. If it does, go ahead. If it does not, you know what to do!
Now, out of the remaining Rs 20,000, allocate 30 percent i.e. Rs 12,000 to your wants and desires This is where you can let your hair down and splurge on those clothes, night-outs, dinners, or your Amazon orders!
And the remaining Rs 8,000 or 20 percent- these are strictly for the purpose of your savings and investment! With this amount, start with a simple SIP (Systematic Investment Plan) in mutual funds and consistently add to your corpus every month.
Secondly, get an Insurance and emergency fund in place
Now that you have your budget sorted, don’t forget the unpredictable vagaries of life, because “ajeeb daastaan hai yeh, Kahan shuru Kahan khatam, yeh manzilen hai kaunsi, Na voh samajh sake na hum.
Your life is a Chirag, a lamp, home to both smoke (dhuaan) and light (Roshni). You’re well-prepared to bask in the glory of your glow, but what about the tougher times? In such a case, opt for a comprehensive health and life insurance policy, along with setting aside some funds for a rainy day or emergency.
As Nikhil Aggarwal, Founder, and CEO, Grip Invest explains, “An emergency fund can help meet your short-time financial needs without withdrawing your investments. It will also prevent you from excessively using your credit options”.
Ideally, while your emergency fund should have about 3-6 months of expenses stored away, you should opt for getting insurance as early as possible, since the younger, the healthier you are assumed to be, and thus, it becomes cheaper for you to get a solid insurance cover at low premiums.Thirdly, start consistently investing in the markets via SIPs!
Yeh Fiza yeh hava
Yeh nazaare yeh sama
Abb pyaar naa hua
Toh phir kab hoga?
The right question to ask is, agar ab apni savings invest nahi Kiya to kab Hoga?
But if you think that markets are volatile, unpredictable, and uncertain, you are certainly right. If the markets were Vyjayanthimala in Jewel Thief,
these lines would suit them aptly
Aise mera jwaala sa tann lehraaye
Latt kahin jaaye, ghoonghat kahin jaaye
Arre ab jhumka toote hoye
Ke meri bindia chhoote hoye
Ab to banke qayamat leti hoon angdaai
In March 2020, the stock market hit 25,638.90 points. A year later, Sensex is touching new heights at almost 59,000 points! Staying put in the market can yield handsome results, given that Sensex has appreciated almost 55 percent in the last year! And the best way to maintain this consistency is to keep investing via SIPs.
Simply put, SIP is an investment method where you regularly set aside a specific, small amount to invest, instead of investing a major amount, or lump-sum together. This period can be monthly, weekly, or any time frame of your liking.
Fourthly, stay put with diversification and asset allocationToofaan To Aanaa Hai Aakar Chale Jaanaa Hai
Baadal Hai Ye Kuch Pal Kaa Chaakar Dhal Jaanaa Hai
Parchaaiyaan Reh Jaati..Reh Jaati Nishaani Hai
Zindagi Aur Kuch Bhi Nahin Teri Meri Kahaani Hai
Ek Pyaar Kaa Nagmaa Hai
Once you have weathered through the bear market subsides and makes way for the bull to run free and generate high returns for your portfolio, it is important to stay in the market to ride over market volatilities, with appropriate diversification of your funds.
As Aggarwal continues, “Diversifying an investment portfolio can minimize risk and yield higher returns. Investors should consider all investment options available in the market, from stocks and mutual funds to new-age investments. This way, the financial losses incurred by one of the investments can be compensated by other options and your overall portfolio has little to no effect”.
In addition to diversification, another important exercise to undertake is that of asset allocation, which refers to deciding the right composition of your investment by dedicating a certain percentage to any asset like equity, debt, or golf can hold in a portfolio. It helps you strike a suitable balance between risk and rewards.
Asset allocation depends on your age and risk appetite. Like, for instance, when you are young, making higher allocations in assets like equity is preferable, since you can withstand a few losses and have a higher risk appetite. As you grow older, the preference shifts to more stable, safer investment instruments like debt.
And fifth, rebalance your portfolio yearly
It’s always a good idea to periodically review and analyze your investment portfolio and make some changes if necessary, depending on how the market is performing and how your financial goals are progressing. A healthy rebalancing strategy will allow you to get the best on your investments
But remember, do not undertake this exercise very frequently, because a higher asset churning would mean you’re letting go of earning optimal returns on your portfolio. Or, as Lata Tai in Pakeezah puts it,
Ajee dhire se kholungee dvaar re
Saiyaan dhire se kholungee dvaar re
Mai toh chupake se, ajee haule se kholungee dwaar reThade rahiyo...