Tag Archives: wealth creation

Stepping out of your comfort zone.

You have just finished doing 50 pushups and your trainer being ruthless orders another 50. Drenched in sweat and exhausted you don’t think you can do take one step further, leave alone do more push ups. But your trainer will not take “NO” for an answer. He keeps at it till you get back down on the floor. You manage 1, and then 5, and within a few minutes, you have done 20. Motivated, and feeling good about yourself, you go ahead and complete the 50. You rise with a new sense of confidence, one that you achieved because you stepped out of your comfort zone.

“Move out of your comfort zone. You can only grow if you are willing to feel awkward and uncomfortable when you try something new.” – Brian Tracy

Similarly, when it comes to money matters, we all have our familiar methods of operation. There are some who firmly believe having money tucked away in a bank is the best option, while there might be other who invest in stocks and shares. But, to see how far you can stretch your money, you need to take a chance, take some risk and give it a shot, to reach the goal. The first step will be difficult, but once you cross that and see the results, you will be much more willing to step out of your comfort zone and go further ahead.
For many of you, pushing yourselves into a new territory is second nature, for many it is a nagging thought hovering in their minds, but not put into practice yet.

The 5 golden points of Going beyond your comfort zone-
1. Be open to new ideas and suggestions.
2. Be willing to take risk.
3. Be patient.
4. Learn from mistakes and experiment with alternatives.
5. Have control over your decisions and never go overboard.

Taking stock

Picture an old-school person like your grandfather. Try and reminisce how he dealt with money. Money would be kept in a steel Safe-locker and he always knew exactly how much money he had in it. In the good Old days, bank deposits were the only investments for the middle class. The bank deposits would all be tabulated neatly in the order of their renewal dates. Monitoring would be perfect. Everything worked like clockwork and money would be in a very orderly way. Discipline and caution were the buzz words and things were always kept simple in the way they handled money.

Contrast this with how money is handled in the present. We invest in several products like Stocks, Mutual funds, ULIP’s and bonds besides the traditional bank deposits. On the one hand, we invest in several options for the purpose of saving on taxes. On the other hand we borrow to spend on credit cards. We even buy homes with home loans so that we can save on taxes. Clearly, the way in which we deal with money is far more complicated that they were in the good old days. When we borrow and lend at the same time, we need to balance our finances and constantly keep watch so that they are within limits.

With so many product options and multiple financial goals like life insurance, health insurance, tax savings, home buys and equity investments we have clearly complicated our handling of money. As different times call for different approaches, we are left with limited options but to create a wider basket of financial products. That has given rise to a portfolio. Your portfolio includes all the financial products you have bought and maintain on a running basis.

But, do we really know what we own and manage our portfolio in a methodical way? In the race for time and against it, we hardly find the time to devote to financial matters. We mostly rush to fulfill specific needs at the last hour and forget about them after that. More importantly, we do not have the big picture nor do we routinely tabulate, monitor or review our money matters. The portfolio itself is only in our memory and hardly organized and tabulated. This clearly leads to lapses, oversight and loss of opportunity.

This is where the old school approach of Taking Stock will make a big difference to the way we handle money. If you have a way of arranging your finances, you are actually preparing yourself for bigger things. Wealth creation happens only when we arrange, manage and take stock of our finances periodically. Taking stock of your wealth gives you a deeper understanding of what you assets you need to own, how you need to grow your money and also the risks you are taking to achieve your financial goals.

Today, most of us are simply letting things be. We are hoping for some random decision to work miracles for us. Miracles with money are a rarity. The richest investors are the most systematic people. They constantly take stock of their decisions and finances and tailor them to achieve their goals. While each of us have our own finances and make our own decisions, we should start taking stock regularly. Start tabulating your portfolio and take stock of it regularly. Wealth will soon follow.

Happy investing!

MAKING UP YOUR MIND ON THE MARKET DIRECTION

 

The markets have a way of catching us on the wrong foot. When you see magazine covers boldly printing a headline – Sensex @ 12000 , we see the index rising in the subsequent weeks. As an investor , we will end up feeling left out if we stay in cash in anticipation of a crash.

Market crashes are not events which follow magazine cover stories which are negative . They usually happen after a stupendous rise in valuations and when investors show maximum appetite for stocks.

Now that the magazine cover stories giving pessimistic views are behind us, it may not be a bad idea to go contrarian.

The factors favoring a positive view are gradually adding up. Let us list some of the factors:
1 The Indian economy is growing at a predictable and healthy pace. 8% plus GDP growth is something unthinkable for  most countries in the developed world.  This growth rate would mean that several sectors should see higher growth within the economy.

2. The monsoon should be closer to normal. That augurs well for agriculture and food inflation which hurt badly last year. A higher base effect would mean that food inflation will not come to hurt in the next 12 months.

3. The government has hit the bulls eye with the licensing of telecom  . The thrust will now move to disinvestment of PSU’s where we will see a surprisingly high mobilization way in excess of budgetary estimates.
That should mean that the fiscal situation will look much better by the year end .

4.  The DTC will make more investors think of investing in capital markets as there will be adequate incentives to invest more.  Therefore the per capita allocation of funds to capital market will rise. There will also be a rapid growth in the investment culture as the demography changes. We have a high head room to expand the reach of financial products and the next few years will see a paradigm shift in investing.

5. GST implementation  will further act as a growth fillip as the parallel economy will continuously lose out and the real economy will gain several basis points of growth from migration of business.

6. The telecom revolution in the making will see a second wave of transformation of businesses. This will change the way we work and provide a fillip to growth while raising efficiency and competitiveness.

When the real economy has several positive factors working in its favour, it will be a safe bet to make our investment  decisions  India-centric and use every volatile movement in  global  markets as a buy opportunity in India.

We should now watch out for  magazine covers which scream ‘SENSEX 28000′.

Then we must probably turn bearish and hit the exit button. Till then , fasten your seat belts. The INDIAN STORY IS HEADED FOR A SMOOTH TAKE OFF.