Are you someone who take great pride in able to withstand harsh times, financial crisis with ease based on your (a) permanent job, (b) saving discipline, or is it (c) your investment decisions which have paid-off well over years? If you’ve selected (a) or (b) as your usual self, you are an ideal material for jobs involving trustworthy personnel, you take pride in following protocols, policies, you are content with what life has to offer. If you selected (c), you are someone who like to take your own shots, a risk-seeker who weighs risks against rewards before taking any action. Please note that selecting any of (a), (b), or (c) doesn’t prototype your character, it aims to equip you to make adjustments if you slide to extreme sides.
As elders have passed the buck to younger generation, most people have inadvertently imbibed the deeply ingrained traditional & may I say “inefficient” habit of being content with what their money earns in a bank deposits, traditional saving schemes. People please note that banks used to be safe-haven some 10-15 yrs ago. As seen recently, banks in present times are equally if not more prone to collapse, your savings (and FDs) are only safe to the tune of Rs.1 lakh (as per RBI) only, anything above that amount is prone to market, operational environment of the banks. Government has bailed out banks in past but do note that with each continuing year, governments across globe are letting markets take their course without intervention in the interest of free, efficient, competitive markets. Administrations have realized that inefficient, incompetent banks, financial institutions like businesses have to perish if they are unable to perform in the interest of investors, stakeholders. Well then, where does that leave a commoner like us.
To avoid being caught in situation where our reliable age-old bank takes a sudden hit, take stock of situation. Up untill now if you have mostly saved your money in bank deposits, PFs, it is time to rejig and start investing. Ideal way is to move out of time-deposits (anyways they are tax and inflation inefficient), park your money in liquid funds for a short-term before you decide on ideal investments portfolio with your IFA.
Investing is an active, prudential, return-seeking discipline that is prone to risks. Yet the markets, regulatory environment is so structured that it favors alpha (return) generation by individuals by making it tax efficient (incase invested long-term), provide inflation-indexation benefit so that your money grows well above rising inflation rates & cover your routine expense schedule. In nutshell, if one derives a risk-reward tradeoff involved in investing, one will realize that investing is a worth-pursuing, rewarding discipline in long-run.
There are ample ways, means and avenues to pursue investing activity. Begin with identifying a goal first to align a right strategy for you. «GM»