5 Financial Promises To Keep In 2020

2020 has just begun and many of you must have made new year resolutions. Obviously, you are not expecting to keep all of them. Some of them might have been made due to emotions – losing weight, quitting smoking for good, fulfilling your bucket list, traveling to your dream vacation destination, etc. What about your finances?

Did you make financial promises to yourself? Most importantly, did you stick to your plan?

Don’t worry. More than 80% of people who tried to keep financial promises have already lost the bet. However, you should definitely give it a second thought and continue keeping the financial promises because this is an investment that will help you manage your funds smartly in 2020.

Here are 5 financial promises to keep in 2020 to yourself for a good portfolio.

Let All Goals Be SMART

Setting up goals is a very task but achieving them is what makes the difference. The goals should be achievable, reasonable, and most importantly MEASURABLE. The early you start the more you achieve – this is a very simple formula which applies to almost all sort of investments. But there should be a reasonable amount of return expectation to it.

There are various goal calculators available which will tell you how you can manage to get a projected amount of return after a certain age by investing very limited amount of money per month or per annum. But considering the rapid changes in the economy and factors such as inflation it is not always realistic.

The best way to plan your investments and stay ahead of all the limiting factors is to diversify your investments and keep on topping it up with a rise in the income.

Plan Your Budget & Stick To It At All Costs

There is a very simple way to decide on this, just make a record of all the monthly expenses including all the utility bills, loan EMIs if any, rent, fuel and all other miscellaneous expenses. It will give you an idea of how much you spend and based on that amount and your income you can calculate how much are you saving each month.

Now you can divide this amount amongst various investment ideas to diversify your investment portfolio. A good investment advisor can guide you on this by analyzing your risk appetite. Remember, without a planned budget, you will always tend to burn out sooner than expected.

Diversify Your Investments

A car can be a good investment if it has comfort, power, economy, safety and features all at the same time. A car with only economy but no power and features will be boring to drive. Similarly, a car with only power and less economy will be very expensive to drive. In the same context, a portfolio should be balanced with all kind of financial aspects. Putting all your eggs in a single basket can put your investments at a higher risk. Learn the art of diversification from certified investment advisors.

The risk appetite decreases with increasing age and therefore the investment should be planned accordingly. At a younger age, you can take high risks as the returns are generally higher when you take high risks, but with increasing age the risk appetite gradually decreases and so are the returns. So, at all the stages your portfolio should be diversified enough to maintain a stable amount of returns throughout. A good investment advisor can help in managing the portfolio.

The Spend-O-Meter

Keeping a keen eye on your spends and expenses, apart from your regular utility bills, EMIs etc. is very important. There can be sudden major expenses such as your child’s education or a wedding which could impact your finances. To manage this, all such expenses should be converted to goals and you should start investing for each of them so that when the time comes you are already prepared for them.

For short term expenses such as purchasing a television or that new smartphone, you should put your savings in a short-term investment plan and then use the return for the purpose.

Never Repeat Your Mistakes

There could have been times when you were broke due to avoidable and unplanned expenses, or probably because you invested in an unplanned manner without some proper guidance. You should learn from those mistakes and try not to repeat them. You should always save and invest enough for those sudden grey times.

We expect that you would stay true to the above promises and hope that 2020 brings happiness and prosperity for you. Wishing you a great new year ahead and hope that you fulfill all of your promises.

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