Investing in simple but not easy. We are often in a dilemma as to what approach to adopt for investing. An average investor on the street is likely to be direction-less about investing and would not likely have any clue as to the purpose or goal of investing. What is needed is a simple approach which we can easily understand & follow while managing our investments. While there can be many different approaches that can be adopted given the different situations or purposes of investment, we present one approach that can stand true for most investors.

THE INVESTMENT APPROACH :

An investment approach has to be relevant and reliable for investors at different times and different financial conditions. It should take into consideration the financial objectives of an average investor into consideration. The attached image represents one such approach to investing that can be followed in our investments. The following are the key elements that form a part of this approach.

LONG TERM GOALS :

The long term goals or funding needs of an investor should be at the heart of any investment planning. There are quite a few long term goals which we see in our lives. Goals like education and marriage for children, purchase of home and car and retirement for self and spouse are the goals that must be in focus. Depending on the family priorities, other goals can also be taken into consideration.

As a first step, we should identify our long term goals by quantifying amount needed, time horizon and savings potential. Accordingly, we should invest in assets that give us the best possible wealth creation opportunity in long-term so that we can achieve our goals.

RISK APPETITE:

After accounting for your long term goals, the next element is identifying your risk appetite or your ability to take risks in investments. For eg., the risk appetite for a 25 year old and a retired person differs largely. Note that we are talking about risk appetite after planning for long term goals because one, we cannot afford to compromise on our life goals and secondly, the risk from equities reduces and returns are more predicable in long term than short term. A person's risk appetite can be identified, for the sake of simplicity, as aggressive or moderate or conservative. This would take into account your financial ability and your mental appetite to take risks and bear losses. This input will be important for identifying asset classes for ongoing /regular investments which are not directly linked to any goals in life.

REGULAR INVESTMENTS :

Ongoing or regular investments are generally of short to medium term time horizon and not linked to any life goals. There are three things you should keep in mind for these investments which will continue during your entire life...

1. Liquidity: At least some part of your investments must be liquid enough so that when you need any money, you are not helpless. Financial planners often talk of an Emergency Fund to be kept which can be equivalent of 3 to 6 months of your household expenses to tide over any emergency situation. Further, for investment purposes, it is recommended that money should be put in avenues that are liquid in nature rather than physical like property and precious metals. This will provide more safety, transparency and control while saving storage and maintenance costs.

2. Asset Mix: While making regular investments you should consider your risk appetite and then identify a proper mix of different asset classes and also the underlying products. You may also design your asset and product mix keeping your tax planing in mind or as per your other financial objectives. Having a proper coverage of your assets is very important before we actually talk about arriving at an asset mix. Most of the time, we ignore to consider physical investments and investments into debt products like PPF, Post office small savings, etc. while arriving at our asset mix. An asset mix has to consider all such assets to be meaningful for you. improvement in your investment plans.

CONCLUSION :

Planning for long-term goals should be at the starting point of our investments and also at the heart of it till we do not exhaust all our long-term goals, including retirement and inheritance. Only after planning for those responsibilities can we look forward to making investments as per our risk appetite and for meeting other general financial objectives. Our investment approach should be centered around these pillars to ensure successful investment outcomes. To begin with, let us first try and remember the image of the investment approach we just read about.

{s}
[[script type="text/javascript"]]
$(document).ready(function(){
new DiscussionBoard("divDiscussionBoard", "112", "http://www.njwebnest.in/esaathi/index.php/discussion").load();
});
[[/script]]
{/s}

For the first time ever, June 21st was celebrated as the International Day of Yoga across the world led by India. Yoga is perhaps the only discipline that focus on a person's well-being holistically, including physical, mental and spiritual aspects. This brings us to another aspect of our lives – our financial well-being for which we are constantly strive for and are more often than not, in stress. We have often talked of how doing a financial planning is a must for financial well-being. Just to refresh, financial planning, in brief, is a process of identify your financial objectives , then preparing and following a financial plan to achieve those objectives. Drawing a parallel between these two distinct yet homogeneous ideas promoting holistic well-being cannot be missed. In this article, we take a look at similar characteristics between the two...

1] The idea of Unity: Our PM introduced yoga as an unity of body and mind, thought and action and as the journey discovery of self more than being just an exercise in the UN General Assembly speech. Financial planning too is a journey of discovering your own financial self, understanding your risk appetite, your net worth, your income, expenses and your financial goals in life. It is also about creating a unity and synergy between your income with your expenses, your wealth with your financial goals and your present with your desired financial future.

2] Being Universal: Yoga is truly universal in nature and it holds the same promise for every individual irrespective of age, religion, occupation, ethnicity and even health. Financial planning too is very universal in nature and can be effectively carried on for every individual irrespective of gender, wealth, occupation or the level of financial awareness. Depending on one's situation, the financial plan can be customized to focus more on specific areas /aspects as one may feel need for. The areas we are talking here cover all wealth and financial aspects of an individual like cash-flow management, investments, insurance, taxation, and estate planning.

3] Need for Patience & Discipline: To realise the true benefits of yoga and of financial planning, one has to be patient and exercise discipline in pursuing them for a long period of time. Whether it be achieving a healthy mind and body or your financial goals in life, the importance of discipline and patience for continuous and proper practice can never be less emphasised. In financial planning you have to take efforts to ensure that you are saving, spending and executing the plans continuously as planned while regularly reviewing and making amendments to your plan.

4] There is No Contest: Yoga does not specify any targets for you and you do not have to face any competition with anyone else. Financial planning is also just for you, customised and as per your own assessment of your needs. When you plan your finances, you are looking are your own risks, financial goals and cash-flows. You do not need to think about others and what their plans are. The financial plan is for you and only you will be able to judge the progress and enjoy the benefits of achieving those goals. Your achievements are also relative in nature depending on your own strengths and weaknesses.

5] Focus on Form & Process: Yoga stresses a lot on proper form, posture, breathing and the process of carrying out any aasanas. Only when we carry out the aasanas in its' proper process can we unlock the true benefits from t h e m . F i n a n c i a l planning too has focus on following the process and executing the action plan, properly and on time, continuously. A proper financial plan cannot be made unless the process is followed sincerely and this includes defining the scope of the planning, understanding the expectations, disclosing all relevant facts and assessing cash flows and financial goals properly to being with. We cannot expect our financial objectives to be met unless we adopt the the process and make regular reviews. A financial plan is not a product but a process to organise our finances just like yoga is about organising our own selves.

6] Going Beyond Body: Yoga is beyond just body and exercise. Financial planning too has a bigger picture and it deals with your financial behaviour, habits, sensitivity and awareness. Adopting and following financial planning in our lives can potentially also alter our way of looking at financial decisions and situations.

An awareness of our financial strengths, weaknesses and our goals in lives can dramatically change our approach to savings and spending. With increased financial awareness, we can see a change in our comfort level and approach to different asset classes and financial products. Over a period of time, we will also begin to see ourselves as more disciplined, steady and logical when in comes to money.

7] It's A Journey: Both yoga and financial planning are not to be seen as one time tasks or surgeries where advantages can be visible overnight. They are to be seen as journey towards self discovery, unity and ultimately well-being. Financial planning is a discipline or organise and plan your finances so that you are are aware and in control of your future. Thus, as a continuous process, it will slowly but steadily lead to much better and improved financial well-being over time. And there is no end to this.

Conclusion: The idea of finding similarities between yoga and financial planning is to evoke the sense of importance and respect for the latter, which we often neglect in our lives. Perhaps by highlighting the similarities we would be motivated to understand, appreciate and finally adopt a financial planning in our lives. It can potentially be very rewarding just like the rewards of yoga which we are talking about today. Nothing can however be more beneficial than adopting both yoga and financial planning in our lives. That way, even the missed part of financial well-being by yoga would be aptly taken care of. By adopting both in our lives, we would embark on a more fulfilling and complete journey of self discovery and well-being.

{s}
[[script type="text/javascript"]]
$(document).ready(function(){
new DiscussionBoard("divDiscussionBoard", "115", "http://www.njwebnest.in/esaathi/index.php/discussion").load();
});
[[/script]]
{/s}

Ever wondered how a wealthy person might be thinking and organising hislife? Well, while the question may sound very subjective, it certainly does evoke some curiosity in us. Most of us see ourselves as not 'rich' enough and are desirous of becoming very rich. Well, the good news is that this article is just for you. It carries 10 ways /ideas, screened from few studies & books, on the characteristics of the rich people. While adopting them may not guarantee you wealth, but it certainly would make you a tad wealthier some day than what will be the destiny by ignoring them...

Be Persistent & Focused:
Being persistent is a personality trait that can be converted into a habit if put to regular practice over time. Rich people are not the ones who will easily give up on something which they believe in. They are much more likely to fight, find solutions, work harder, get smarter in face of adversities. They are also very focussed on one thing at a time.

Have Respect For Time:
If it is one resource which is valued the most than others, it is time. In fact the rich are very likely to think of what they earn on an hourly basis rather than on a monthly or yearly basis. They then compare on an hourly basis how much they are making money or loosing money by not doing any productive work. Also the rich are much less likely to procrastinate and would most likely finish the job or take the decision in the least possible time required.

Setting Challengeable But Attainable Goals All The Time:
A challenge is a big motivation and opportunity to excel and to grow. The rich often set goals, in all matters from work to play. They even set goals to become rich. The act of setting goal itself is a rewarding exercise and it helps one to visualise and feel what is to achieve it.

Having A Mentor In Life:
Most rich people have some mentor or ideal who they listen to, read about, consult or follow. They can be even heroes in their chosen industry who would inspire, motive and help avoid mistakes. They are however careful in not following the mentor blindly and adapting any advice to their own situations and beliefs.

Staying Positive And Confident:
It is very rare to find a rich person who has self doubts and has a negative approach to things. The rich have a positive approach to life, they are happy, upbeat and are also grateful for the things they have in life. Very often you find that the rich are happily married, they love their chosen job, are healthy, they avoid taking negative or gossiping and lastly they believe in great possibilities and opportunities. Because of their self belief, positivity and a habit of achieving goals, they are also much more confident.

Keep Learning And Growing:
The rich are more likely to be masters in their business /jobs and on top of the things. To remain so, they keep interacting, observing and engaged in things of their interest. Most are also very avid readers often reading books on biographies, self-help books, money and those related to their own trade and business. After reading, they take be of actionable points to implement in real life thus helping they grow personally.

Tracking Progress And Making Improvements:
If we walk without knowing where we are headed and what change we need to make, we are sure to end up nowhere. For eg., if you do not know how much savings you need for your retirement, you will never safely retire. The rich make it a habit to measure their goals after making them. Thus, most rich people will also likely balance their bank accounts on a monthly basis and follow a to-do list on a daily basis. Some may be obsessive and even measure how much kilos they lost, miles they ran and calories they ate during a month!

Surrounding Self With Successful Persons:
One becomes the company he keeps. Of course we are often surrounded by the people like us. But the real difference is in the company you want to keep. The rich aspire to keep a company of more success oriented, positive, knowledgeable, networked and powerful people. They intuitively understand the importance of these relationships and are intentional in nurturing these positive relationships by investing the required time, money and energy. It can be said that relationships are the currency of the rich and the successful.

Take Calculated Risks:
The rich people like taking calculated risks in their endeavours. The idea is not to experiment but to grow, excel and exploit opportunities before anyone else. This personality trait makes them appear bold and courageous. The risks are well calculated, often the result of proper research, consulting or brainstorming. At the same time, the costs of failure are known and the risks are well spread out; never putting all the eggs in one basket.

Spend Much Less Than What You Earn:
It may sound very simple, but the secret to becoming rich is by spending much less than you earn and making the money saved to work hard for you. The problem with most poor people is that when the income rises, they also increase their expenses, often buying better gadgets, cars, etc. There are many rich people around us who would never appear rich to us, often living within means much below than they can actually afford to. Spending less, starting to invest early, saving regularly, saving increasingly more and investing in the right asset classes are some of the timeless principles of wealth creation we should all adopt in our lives to become rich. This method is the most practical one which literally guarantees you wealth in future.

{s}
[[script type="text/javascript"]]
$(document).ready(function(){
new DiscussionBoard("divDiscussionBoard", "77", "http://www.njwebnest.in/esaathi/index.php/discussion").load();
});
[[/script]]
{/s}