Skip to main content

Focus on the Bird's Eye



One day Dronacharya, Guru of the Pandavas and Kauravas decided to test his students on their Concentration. He called all of them and told that today he will test all the students on their archery skill. He said that he has put a wooden bird with a painted eye on a tree across the river, and the students have to hit the eye of that bird with a single shot to pass that test. First he called Yudhishtra. Dronacharya asked, “Please tell me what you can see.” Yudhishtra replied, “I can see the bird, the tree, its branches, and the fruits.” Dronacharya told him to leave the bow and arrow. Similarily he called most of the students and asked them to explain what they can see. Most of them replied in the same manner, and were asked not to shoot by their Guru. Finally, Arjuna was called and was asked the same question. He replied, “Gurudev, I can see only the eye of the bird.” On hearing his reply, His Guru asked him to shoot. Arjuna shot the arrow at the given target and accomplished the task. Then, Dronacharya explained the power of concentration to all the students. If our Goal is clear then we should not let loose our attention to the other details, we should just focus on the goal and it will be achieved.
Similar is the case while choosing our investments, we tend to see other things surrounding our Goals rather than Goal itself. Many a times we choose what we others have to offer without focussing on our requirements. Buying a 5 year lock-in FD for the purpose of buying a car in 3 years won’t help us in achieving that Goal. Sometimes, we also get lured into investments by getting some discount from our broker or a free insurance cover which is actually worth a penny. We should decide on the investments by looking at our key requirements rather than what is being sold to us. By doing this, we will not only achieve our financial goals but also there will be peace of mind with regards to the investments. One can do this by following simple principles before starting our investments.
1.       What are your Goals? : You should not simply invest without defining the purpose of that investment. You should first chalk out the financial goals that matter to you most with a clear need to fulfil them, be it your kid’s graduation money, your retirement funding, money for your dream home, or anything else.
2.       Goal Timeline: When are your financial goals due? For e.g. you might want to buy a new car in 2-3 years but there are good 25 - 30 years to your retirement. Once you have defined these goals on your life timeline, it becomes easier to manage them.
3.       Your Risk appetite: You should also know where you personally stand in terms of taking risk. You should know your comfort zone when it comes to investments. Only if you have an appetite for equity volatility, should you go for equity investments as they are a long term game. You will have to stay invested for a longer duration to get better returns.
4.       Where should you invest: This decision should depend upon first 3 parameters discussed above. Let’s say for a goal which will be coming next year, you should not risk investing into equities. If you have ample surplus, you can start investing for all of your goals in a single shot or you can prioritize your investments depending upon the importance and timeline of the goals.


Charu Hastir, CFPCM is founder of www.theriteplan.com. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/

Comments

Popular posts from this blog

Union Budget and Your Financial Plan?

Honorable Financial Minister Piyush Goyal presented this year’s Interim Budget on 1st February 2019. Every Year, on the day of the budget announcement, you can see almost every individual glued on to their Television or mobiles to check the budget updates with much excitement. Sometimes the Budget announcements cheer us and sometimes they make us sad as we think that there are not many benefits being offered for individuals in our tax slab.

Budget is also referred as Annual Financial Statement as it contains an extensive account of the Government’s finances i.e. Government’s revenue and expenditure for the fiscal year. How relevant is this budget when it comes to our personal financial savings? Should we wait for the Budget to be announced and then start our investments or should we do our investments without any relevance to the Budget? Let’s discuss this in detail.
Budget helps in Tax Planning

Budget surely helps in planning the taxes for the next financial year. Budget is presente…

Why your Financial Plan is always Work in Progress?

Ever heard someone saying, this is my last month in the Gym, after that there is no need for me to workout ever again…I will stay fit for the rest of my life without any fitness regime. No one can retain the perfect physique forever without exercise. It is always a constant effort to stay at the desired level for almost anything that you think of. You cannot be a great chef without trying out new recipes, you cannot be a great marketer without adapting to new marketing strategies, you cannot be a great fashion designer without adapting your fashion sense towards the trending styles. Leave all of this, you even cannot even think of becoming a good parent if you don’t change from old tricks to new methods for upbringing this generation kids. If you have to upgrade your act with every other thing in life, then how your investments could be any different.
The Financial Planning Process has 6 broad steps with the last one focussing on the importance of monitoring and revision of the plan …