Let’s learn from Deepawali – “Financial Planning ke pehlu”

Deepawali is one of the biggest festival in India. It is a festival of love, happiness, light and relationships. Whenever, we think of Deepawali we recall “Dhan ki devi – Laxmi” and “Sankat Mochan – Ganpati ji”. We all must celebrate the festival but with this it is also important to learn some lessons associated with this. Today, we are going to learn some basic lessons from the festival “Deepawali”

1) Diwali Shopping – During Deepawali we purchase lots of new things like clothes, jewellery, home decors, gifts and other things. Infact, these days we can see Diwali sale everywhere, giving maximum discounts and offers. This leads to some unnecessary shopping and wastage of money. Our ancestors use to teach us “the one who waste money, never gets Laxmi Ji’s blessings. It’s so true in financial planning sector, the one who spend money in luxury can never save money for his future and emergency. So, control your desires and focus on your needs. It’s important to ASSESS YOUR FINANCIAL SITUATION and CREATE BUDGET accordingly.

2) Crakers & Fireworks – Diwali is known for fireworks. Though now most of us focus on eco-friendly Deepwali. But earlier we used to purchase Crakers keeping in mind for which age group we are purchasing, whether it will be safe or not because for kids small Crakers were there and for adults a wide range of Crakers were available. It was purely on the basis of risk associated with the crackers. Similarly, in the financial world we have wide range of financial instruments however, one has to choose the product carefully as some of the instruments are attached with some risk. So, one must understand the product, risk and returns associated with it and then invest in it afterall, it’s your hard earned money. KNOW YOUR RISK TOLERANCE as every individual has different tolerance level.

3) Discipline – Diwali teach us how to be in discipline. We wear clothes which don’t catch fire and play with the crackers carefully. Similarly, in financial planning if you are not disciplined you will not earn what you have wished for infact, sometimes your indiscipline approach can loose your wealth. So, invest in a disciplined way, do decide what you want, SET YOUR FINANCIAL GOALS and invest in it regularly without any break. Most of us set goal, invest but then they  pull out money in-between, this is not the right way of investment, for that you must have an emergency funds (savings) with you.

4) Purchase of Silver/Gold coin – Every year, most of us purchase silver and gold coin on diwali as it is said to be very auspicious. They keep on adding the coins every year and this helps in making wealth. In financial planning also, it is advised to increase your investment portfolio as an when your salary increases or you get bonus/incentives. It will help you to achieve your set goal before the deadline. 

5) Protect – The way we enjoy Diwali we also keep in mind the protection of our near and dear ones. Similarly, the way we plan to invest in financial instruments, we should also make strategies to protect our wealth. If the roots are not strong you can never enjoy fruits. So, invest in protection plans, insurance, emergency funds, retirement plans. PROTECT YOUR FUNDS

6) Hose Cleaning – Every year before diwali we clean our house. Similarly, we need to RE-VISIT and RE-EVALUATE OUR PORTFOLIO. Regular review and monitoring of the portfolio is very important as you come to know how your portfolio is moving which fund is working good and which funds needs to be changed with some other.

Summary : Diwali is a festival of creating wealth but just don’t invest anywhere and everywhere. It is important to have a knowledge about your product and then go for it. Afterall, it’s your hard earned money.

Being a financial advisor, I would advise to invest 15% – 25% of your salary in building your portfolio and you can strech this as per your financial capability.