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Things to consider before making any financial decision

You need to plan meticulously and ascertain pros and cons of the available instruments before choosing the one that suits best for you to meet a financial goal.

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Making a financial decision is not a child's play or like buying groceries for households.

Making a financial decision is not a child’s play or like buying groceries for households. These decisions are mostly long-term in nature and involve large amounts of money over several years.

So, you need to plan meticulously and ascertain pros and cons of the available instruments before choosing the one that suits best for you to meet a financial goal.

Following are some of the things that you may consider before making any financial decisions:

Investing and Redeeming

You shouldn’t invest just to save tax or just to keep the money invested somewhere. While tax saving and investment motives are good, you should align the investments to fulfill your financial goals as well.

For this, you need to choose the financial instruments judiciously before investing and redeem the same only to meet the financial goal.

“Identify your objectives before buying or selling. Goal setting is crucial, understand your long-term and short-term goals,” said Prashant Sawant, Co-founder, Catalyst Wealth.

Cost of Financial Decision

While making investment decisions or taking a loan, you should compare the costs before selecting the best suited avenue.

“Once goals are set. The important thing to consider before making any financial decisions is to estimate your cost. This could be the cost of investing in the stock market, getting a home loan, investing for your retirement. Ascertain the cost of your financial decision and align it to your objectives,” said Sawant.

Compare the Pricing

After ascertaining the cost, compare the pricing to determine the worth of a financial decision.

“Calculate and compare the pricing of different investment options before deciding on one. It will help examine and evaluate your financial decision. Knowing the worth for which you are paying will help you minimise the risk of losing money,” said Sawant.

Invest with a Purpose

The objective of any investment is to reach a financial goal by taking minimum possible risk. So, don’t take unnecessary risks. But, in case you need to take a risky route to reach your financial goal, know it well and take a determined step.

It will give you conviction to stay invested by overlooking short-term volatility.

“Investing with a purpose is a great way to ensure you achieve your goal and the required amount of cash. This also helps during the time of market fluctuations and volatility. Never invest in the market if you don’t understand it clearly,” said Sawant.

Consult a Financial Advisor

If you can’t determine your financial goals, how much to invest, in which financial instrument and for how long, you should take help of a financial advisor, who would not only plan your investments, but would also help you to stay on course to reach the financial goals.

“Take the help of a financial advisor or learn technical analysis to gauge the market entry and exit. Benefits of knowing economic indicators will help you think like an investor, planner and saver,” said Sawant.

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