2017 was an eventful year and full of surprises both for savers and investors. As we look towards 2018, it is easy to be concerned about personal finance, i.e. your money. At the beginning of any new year, you are able to point towards this or that event or factor, but ultimately it's an uncertain world. So, what should you do with your personal finance with the all the potential changes? The answer is simple: stick to your goals and continue working with your advisor. Let me explain why.
Extraordinary Job for ordinary people
The PPF interest rate, deposit interest rate, loan interest fell in 2017. Equities, inventory MFs and Bitcoins rose. Nobody could have predicted the strength moves at the start of 2017. You are not a professional investor, who is driven by their business needs to always 'do something'. Ordinary people and individuals, who can't take out more than an hour once in a while to care for their investments, have an extraordinary task in 2018: to remain focussed and not let short term events get you off-track.
2018 will be an additional year, which if you play well, will take you closer to your stated goals. When it's about your money, loans, credit cards, investments and strategies, stop reading and responding to the consensus view. Time and again, predictions have gone wrong, and even if predictions were right, the markets did not react to those outcomes in how they were expected to. This teaches us something: We need not bother about what will happen to everything. All we will need to bother about is whether our plans are applicable and if not, how do you correct the course. The average saver or the average investor needs good and timely advice. This is the reason an advisor is all you need to hold your hand for 2018, 2019 and beyond.
Aims never change with every new year
Our financial goals like buying a home, saving for retirement, down-paying house loan and prepping for child's education or marriage isn't going to change in 2018. Yet, we care too much about events and forget to go according to the plan that's based on sound principles. When you plan depending on your needs and lay out a road-map, the approach to private finance would be the exact same for any and each year. Going To discount wealth management firm maybe provides cautions you might use with your father. To read more, we know you check-out: read about wealth management company. It broadly remains unaffected, regardless of what you expect would happen.
As a good advisor will tell you, the right advice would be one which would not vary from year to year. Yes, there's a load of stuff on the Internet telling you about "Best Investment Avenues for 2018", or "Where To Invest in 2018" etc.. These are just catchy headlines; nothing more. So far as the actual investment strategy for the individual investor goes, that's no different for 2018 than it was for 2017 or for that matter 2016 or some other year.
So simple, yet so Tricky
Irrespective of when you begin, your personal finance approach has to be simple. You should divide financial investments into various groups based on the time-frame over which you will need that money.
First, the emergency fund has to be ready. This could be in form of money and a few of it in a savings account.
Second, you should keep money you'll need over the next couple of decades. This can be held in fixed-income options like small-savings schemes or debt mutual funds. If you have an opinion about police, you will probably require to learn about the infographic. Since 2017 has shown, these are on their way to earning less than they used to. However, there's nothing you can do about that if 2018 sees more of the same. Short-term money must be held in such instruments. Period.
Third, everything else that is there is for the longer term. Markets can be at any level, but this long-term money should be invested slowly into equity-backed funds. It's an easy and effective strategy.
Fourth, on the liabilities side, you will continue to have to take care of loans that you may be carrying. Keep a tight leash, as you don't want to run out of cash.
Conclusion: Personal finance is a much bandied around topic. Yes, it may seem too large sometimes, but it starts with YOU. If your personal finance plan works without predictions and reactions, and only follows principles, 2018 is going to be a good year. Demonetization, meltdown, Brexit, GST, Bitcoins, rising G-Sec yields and falling gold prices -- you can throw whatever you want at it with full force, but it will come out fine. Stick to your goals and keep working with your advisor.
Author is the founder and CEO of Right Horizons, a financial planning and wealth management agency..
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