To be prepared is half the victory, goes a Spanish adage and preparation comes from planning. Then why is that majority of us have apprehensions about taking little baby steps when planning for our future, including our investments? Unless you know the road that you want to take, how can you ever reach your goal?
How planning helps you
Sunil and Satish were good friends right from school days. After completing their studies, they got into high paying jobs. Now, Sunil was clear about his wealth-creation requirements. He set milestones to achieve the goals and started investing accordingly. Satish, on the other hand, used to invest on need basis (to avail income-tax rebates) or on recommendations of his friends without considering if the investment was suitable for him.
After a decade of their respective investment journeys, you would know, who has been more successful and why. Sunil, because, he planned and set milestones, and followed up his plans with action.
Now, how can you ensure that you do not land up as Satish? Whatever be your age, income bracket or situation, there needs to be a plan, a goal, a mission statement, without which you will not have a direction to reach your destination. To try to foresee the future and the fear of failure are one of the primary reasons that hold you back, besides plain laziness. And if you do not take the initial baby steps, rest assured, you will regret what life dished out you in your journey.
Plan your wealth creation journey
The answer is simple and there are no complex solutions for this. First of all note your current asset and liabilities. Note your income and expense records and check whether the surplus you have is invested in financial products you understand or is it lying in your savings bank account. Alternatively, if it?s a deficit, look at your expenses more closely to check for leakages or expenses of frivolous nature. Compare it with your goals, if any. In case you do not have one, it?s time you sit down with your spouse, or on your own and start making one.
Revisit your existing investments and check where do they fit with your goals. If help is required, do not hesitate to ask. Try to find a financial advisor who will work for you. If required, meet a few and, then, and choose one with whom you have been able to develop a rapport. Moreover, with the data and information and the goals which you have planned, execute the plans and monitor the progress at intervals of 3-6 months. Now, as you would have noticed, the planning is elementary, as Sherlock Holmes would have told Watson. Now that you have taken the initial baby steps of planning, the next step is to execute. As Leonardo Da Vinci stated, ?Knowing is not enough, we must apply. Being willing is not enough, we must do.?
By execution, it means the next step in the planning process. You now know what exactly you want to do. You have your investment goals in place, which means you know the time horizon, liquidity needs, risk profile and asset allocation for the investments to be carried out.
If you are not sure, do re-visit. Understand that planning is a strategy and time spent on strategy is an investment by itself.
If you do not spend sufficient time on this or do not do justice in this activity, rest assured, success will be difficult or, if achieved, then luck would have played its part.
Do bring a method to your investments. If you have already done so, do revisit and check if all the elements have been included. For those who have not, say, because of fear or laziness, it?s a big price you will pay when you will see your friends on a higher pedestal, only because they planned the journey and also had the courage to execute it.
As Victor Hugo rightly stated, ?He who every morning plans the transaction of the day and follows out that plan, carries a thread that will guide him through the maze of the most busy life. But where no plan is laid, where the disposal of time is surrendered merely to the chance of incidence, chaos will soon reign.?
The writer is founder and managing partner, Zeus WealthWays LLP