Since last year, 9 out of 10 people have molded themselves to fate and the common thought they have aroused is “life is uncertain, let life take me wherever it wants to”. It seems as if people have resigned to destiny and have become desire less, with no future vision in and the reason behind all these thoughts is the Pandemic that is haunting all over mental and financial health.
One thing which has made us realized that this Covid is something which even the specialized experts, best of financial planners and the renowned astrologers were unable to predict and thus dumb-founded every single person in this universe. If someone says I saw a pandemic coming, either he is god or he is lying. Prodigious, cold-blooded and almost destroyed every hypothesis about shielded businesses.
The rest 1 in 10 who aren’t looking blurred or insensate is the one whose finances has not been affected as much as others. The question arises ‘how’? Does his/her funds have a mask? Pandemic has given us a new necessity for protecting ourselves from Covid. How can a mask protect our finances from disasters?
How these people were able to protect their finances. Was there some sort of a mask that helped them? MyFinopedia has been specialized in emphasizing that one has a limit to reduce spending but our capital planners assure that there is no limit to earning. And we have always encouraged our clients to focus on positivity and earn more. Let’s understand in detail.
All the savings that flown out during the lockdown are left with least bank balances. The people who have made investments have not only masked their savings but have earned from those funds.
Supervising and organizing one’s investment behavior is vital to generate returns. For long-term goals, invest in equities, whereas all the short-term events must assist the plan. Staying firm will reward the investors over a longer period.
Another huge learning from the 2020 fall in the market is that investors should buy more dips and can use it as an opportunity. The mantra of successful investing will always be buy at low and sell high.
“Time in market” is the principle to create wealth from equities in the long horizon. The volatility of the inherited stock market is not a one-way street.
Any investor should understand that there is no immediate and momentous relationship between economy and stock market. In many situations, the markets are forward looking and take into account several other factors to value equity values.
During a market downturn, it’s not only the large cap but also small and mid-cap that showcased elasticity to jump back. Therefore, rather than reacting to external factors, long term investors should focus on their portfolio.
Investing in debt for preserving capital purposes only and not for wealth creation over the long term. The lower interest rate promotes growth in a down trend.
Equity returns tend to shift upwards over the long term, but involve volatility in the short-medium term. The rising inflation makes a hole into the returns earned from fixed-income investments.
Composed by the movements in asset prices, a long-term investor’s portfolio must contain 5-7 mutual fund schemes for inflation-adjusted returns over the long period. An investor can start the de-risking process by shifting funds from equities to less volatile debt funds to meet the goals comfortably.
A Financial Emergency such as loss of job or medical urgency may occur at any point of time and hence an emergency fund should be created to meet unforeseen situations.
When any product sees a major fall or experiences an uptrend, a rebalance is required. A regular rebalancing is in fashion by various investors to maintain the return expectations on average.
Delaying is a major issue and the majority of investors are unable to make timely decisions about their investments and risks. Wholly, it gives a clear image of an investor’s financial position.
MyFinopedia’s Views
We step up in your shoes and take steps towards building up a more flourishing plan for long term wealth creation keeping in mind to withstand any future emergencies.
