MAKE MONEY OR CREATE WEALTH---SEQUEL

Part 1 of the article Make money or create wealth dealt with the factors to determine your strategy. Part 2 will try to list do and don’t in the process of creating wealth:-

I am too busy to think about my investments

We are happy to learn that you are busy in your work. That you are working very hard to meet your targets to justify your Form 16, should not be a reason to let your money idle away in your bank account or fixed deposit. Your money should work harder than you do because it is this hard worked money that is going to help you achieve your goals; viz; buying the dream house, or funding your children’s education or building the retirement nest to see you through your retirement with “sar utha ke.” Neither will ad hoc investments made every now and then will help you much in fulfilling your goals.

I want to allocate funds to hot tips.

This can be viewed as a corollary to the above myth. There are people who tend to pay too much attention to every happening sector/stocks/funds/commodities et all. The first pre-requisite to an investment strategy is to have an asset allocation plan specifying allocation to different buckets like equity (including MF), debt, theme or sector specific funds, commodities etc. Stick to your defined asset allocation and you’ll be a happy man. Just because a particular fund or stock or even a commodity has moved does not make it investment worthy.

  

Align your investments with your goals.

Your investments should be in sync with your goals. In other words, your investments should mature around your goals. Neither too early nor too late, else it will defeat the very purpose of goal planning. One simple way to ensure timely fund availability is to start goal based sip for a period expiring around the same time your goals come up for payment. An investment plan without any goal is like boarding a Hyderabad bound train to reach Ahmedabad!

Appoint a financial planner.

Just as you have your family doctor or CA or better still your insurance agent, appoint a financial planner. A financial planner can not only help you in chalking out a financial plan but can also act as navigator—helping you to maintain your course and also take corrective measures if required.

I prefer to invest only in property

More often than not we have come across people who are fan of property investment. They believe that investment equals property. Have you ever wondered why property pays?? Simply because you usually invest in a property for 10 years and above. Time in the market is more important than timing the market has been proved true by property investments. Extend it to Mutual fund and you may end up with another earning member in the family by the time you retire.

India is one place where the economic growth shall be trending upwards for next few decades. Whether you just want to ride the wave and create wealth or micro manage your portfolio and attempt to make money--- the choice is yours. We only wish you would say “yehi hai right choice…”