Before investing your savings, you must get rid of the following things
(Vinod Anand)


“I want...” could be the most dangerous words for your finances, mostly because we seem to want everything--a world tour, a swanky car, a plush abode. However, extravagance can lead to financial hell. Always remember the first budgeting lesson: separate your expenses into discretionary, necessary and luxury. Indulge in the last one only when you’ve taken care of the first two.

The Jains and the Sharmas have it, which means you want it too. It doesn’t matter whether you can afford it or not. Envy could lead you into the big black hole of debt, and escaping it can be rather difficult. It may be tough, but living within your means is the only way to financial independence. A loan is good only if it helps you build an asset that will grow in value. Otherwise, avoid taking one.

“I picked a good stock, but ran into bad luck.” “I work so hard in the office, but the boss is partial and doesn’t give me a raise.” If you tend to blame everything and everyone for your dire financial straits rather than yourself, you’re letting emotions cloud your judgment. Anger could also lead you to be impatient and make impulsive choices. Learn to evaluate your decisions rationally and, more importantly, figure out a way to remedy the situation. So, invest in your career by re-skilling, or work with a high performer to learn how to do the job right.

‘Buy one, get two free!’ ‘Low interest rate of only 7%!’ Tempting offers, aren’t they? But have you checked the hooks attached to these baits? The greed to make a quick buck often blinds us to the high risks that come with attractive schemes, making us prey to various traps and scams. You should ascertain your financial capability and risk-taking ability before opting for any scheme. Fix a specific target for your investments, and when you achieve it, redeem the investment.

Ok, it’s always difficult to admit you’re wrong, but doing so will be one of the biggest financial favours you could do. To yourself. So, if a stock you considered a great pick has tanked swallow your pride and admit that you made a wrong decision. Holding on to your arrogance and an investment that is losing money will only mean that you’re losing out on benefits you could have earned had you invested that money somewhere else. Here’s one way to keep your ego out of your investment decisions. Set a stop-loss order for all your stocks, if the share price falls below a certain limit, sell it.

Procrastination can cost you big money. If you’re lazy about paying your bills, you could end up with hefty penalties, ranging from Rs.75- 100 for a delayed phone bill payment, to 2.5-3.5% a month on the overdue amount of a credit card bill. Worse, if you fail to pay an insurance premium on time, your policy could lapse. To avoid this, start ECS payments and make a financial calendar. Check it every month to ensure that you don’t miss out on any goal. Of course, - your work doesn’t end here. Plan well in advance for your goals and rebalance your asset allocation regularly to achieve them.

Going obese on anything will just make it difficult for you to stand up again if you fall. So, concentrating on a particular industry, theme or stock is a bad idea. Remember the fate of most infrastructure funds and the fact that they’ve still not managed t1 recover? Ensure you have a balanced financial diet by diversifying your investments so that your portfolio remains healthy.

Author's Bio: 

Love is Basic in Life


Born in 1939, and holding Master’s Degree both in Mathematics (1959) and Economics (1961), and Doctorate Degree in Economics (1970), Dr. Vinod K.Anand has about forty five years of teaching, research, and project work experience in Economic Theory (both micro and macro), Quantitative Economics, Public Economics, New Political Economy, and Development Economics with a special focus on economic and social provisions revolving around poverty, inequality, and unemployment issues, and also on informal sector studies. His last assignment was at the National University of Lesotho (Southern Africa) from 2006 to 2008. Prior to that he was placed as Professor and Head of the Department of Economics at the University of North-West in the Republic of South Africa, and University of Allahabad in India, Professor at the National University of Lesotho, Associate Professor at the University of Botswana, Gaborone in Botswana, and at Gezira University in Wad Medani, Sudan, Head, Department of Arts and Social Sciences, Yola in Nigeria, Principal Lecturer in Economics at Maiduguri University in Nigeria, and as Lecturer at the Ahmadu Bello University, Zaria in Nigeria. Professor Anand has by now published more than 80 research papers in standard academic journals, authored 11 books, supervised a number of doctoral theses, was examiner for more than twenty Ph.D. theses, and has wide consultancy experience both in India and abroad, essentially in the African continent. This includes holding the position of Primary Researcher, Principal Consultant etc. in a number of Research Projects sponsored and funded by Universities, Governments, and International Bodies like, USAID, IDRC, and AERC. His publications include a variety of themes revolving around Economic Theory, New Political Economy, Quantitative Economics, Development Economics, and Informal Sector Studies. His consultancy assignments in India, Nigeria, Sudan, Botswana, and the Republic of South Africa include Non-Directory Enterprises in Allahabad, India, Small Scale Enterprises in the Northern States of Nigeria, The Absolute Poverty Line in Sudan, The Small Scale Enterprises in Wad Medani, Sudan, Micro and Small Scale Enterprises in Botswana, The Place of Non-Formal Micro-Enterprises in Botswana, Resettlement of a Squatter Community in the Vryburg District of North West Province in the Republic of South Africa, Trade and Investment Development Programme for Small, Medium and Micro Enterprises: Support for NTSIKA in the Republic of South Africa, and Development of the Manufacturing Sector in the Republic of South Africa’s North West Province: An Approach Based on Firm Level Surveys. Professor Anand has also extensively participated in a number of conferences, offered many seminars, participated in a number of workshops, and delivered a variety of Refresher Lectures at different venues both in India and abroad. Dr. Anand was placed at the prestigious Indian Institute of Advanced Study (IIAS), Shimla in the State Himachal Pradesh, India as a Fellow from 2001 to 2003, and had completed a theoretical and qualitative research project/monograph on the Employment Profile of Micro Enterprises in the State of Himachal Pradseh, India.