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/
No comments:
Post a Comment