Financial Well Being – The 2020 New Year Checklist

Yes, it’s that time of the year again, the time to make those resolutions for the year that we inevitably end up breaking by February if not earlier. Well, this isn’t cynicism speaking its facts, research suggests that 45% of people fail their resolutions by February and less than 20% make it through the entire year. And, what are these ever-elusive goals that we set for ourselves? Invariably the most common resolutions have to do with Physical Health (losing weight, eating healthy, exercising) followed by Financial Health (saving regularly, meeting goals).

Well, the most cited reason for failing at resolutions is lack of willpower, however, this year we’ll try to circumvent failure at least when it comes to our by having a game plan in place and by automating our investments.

Here’s your Financial Fitness plan for 2020, follow it rigorously and you’ll be at a much better place (financially) next year.

Step 1: Budget Better

It’s as simple as creating a monthly shopping list. You know the amount you can afford to spend, you know the essentials and you can even make room for luxuries as long as you can make a saving elsewhere. Writing down your budget with a clear allocation for monthly expenses, rent, savings, goal-based investments can help you be more fiscally responsible. You can use an expense manager such as Walnut or tally up your Bank statements to find out where you’re bleeding money. Whether it’s your morning dose of Starbucks coffee or your cigarette habit, once you see how they add up, you’ll be sure to revaluate your decisions. If you’re looking to get started with a basic budget, don’t overthink it, you can use the popular 50-30-20 rule to get started.

Step 2: Become Debt Free

Debt can be a dark cloud looming over your conscience and can affect your financial behavior greatly. Whether you’re in crippling student loan debt or paying off a mortgage, having a plan in place helps you from getting overwhelmed. If you have multiple sources of debt such as a car loan, bike loan, personal loan and the like, the best way of going about it is striking off these debts one at a time. You can start by paying off smaller debts such as your car loan so that you get some momentum and your confidence starts building up. Slowly move on towards your larger debts so that you can pay them off one at a time.

Step 3: Plan for the Unplanned

Create an emergency fund and get your Health and Life insurance in place. Yes, we know that it feels like a waste of money especially when you’re just starting off in your career but tragedy can strike at any time and it helps to be prepared. Start by creating a rainy day fund that’s at least 6 months of your monthly salary to prepare for emergencies such as layoffs. Also, start your Health insurance as early as possible, the earlier you start the lower the premiums you pay for the rest of your life. You should also invest in a Term life insurance plan as they are cheap to acquire and ensure a financial cushion for your loved ones.

Step 4: Create a Retirement Fund

We know that retirement can seem like a lifetime away, but well so did 2020 at the beginning of the year. Having a clear picture of how much money you need to have saved up for retirement will help modulate your fiscal behavior. Setting your current income as the standard, a retirement calculator will tell you how much of a corpus you’ll maintain your standard of living post-retirement.

Step 5: Diversify, Diversify and Diversify

Never put your eggs in one basket, the stock market can be a calamitous place and to weather the ups and downs of the marketplace you need to have a diversified investment portfolio. Whether it’s mutual funds, stocks, bonds, real estate or bitcoin, you need to have a sufficient “debt v/s equity” ratio to ensure that your boat is steady when the waters get choppy. It helps to have a wealth manager or a wealth management firm in place that can manage your investments for you and tell you how exactly your assets must be drawn up with respect to your financial goals.

Step 6: Automate everything

Wealth Management platforms or investment management platforms such as Wealthfy can help make the journey towards financial health a lot easier. Trusted by the Top Wealth Managers in India such as Aditya Birla and Kotak Asset Management, it’s been voted the top wealth management platform in India. With dedicated apps for Wealth Managers and Clients, it promises a high level of transparency and brings the cutting edge of Artificial Intelligence and Robo-advisory to your 2020 financial strategy.

For more details ask your Wealth Management firm about Wealthfy today

Why Your Friend Shouldn’t be Your Financial Adviser ?

In our times of need, we always turn to our friends for advice, whether it’s life, relationships, careers or anything that’s on our mind. Well, why should finances be any different, right? Well, when it comes to finances it gets slightly more complicated. In this blog, we cover why taking financial advice from your friend might be a recipe for disaster.

You Lose Objectivity

When you’re with your financial adviser, you need to ask some hard questions. There may be disagreements over how you want your money to be invested. In fact, your advisor might even give you an earful over your frivolous spending habits. They will not take into account any personal problems that may have led you to act that way, the best advisors are quantitative and analytical. However, if your friend is your advisor, you may pull back on the punches, not ask the hard questions and not hold them accountable for their bad advice as you value the relationship. This is bad news as you aren’t able to take an objective view of your finances, neither is your friend able to maintain their objectivity as they know your problems and have a stake in them.

Your Friend isn’t the Expert

Qualifications and experience mean everything when it comes to being a financial adviser. While your friend may have made a lucky investment and made a great fortune for themselves, it doesn’t mean they will be able to replicate the success for you. While looking for a financial adviser always look at their past track record, years of experience and their college education. If they’ve concentrated on acquiring a degree related to financial services, it’s clear that they were focussed and dedicated to Financial Management as a career and didn’t drift into it. This level of intent and commitment means they are passionate about being a financial expert and are likely to be up to date and current with their strategies. While choosing a financial adviser always look at the number of clients managed, assets under management, a record of performance, and data with regulatory bodies (To check for fraud). This will ensure that all your bases are covered and you’re taking financial advice from the best in the business.

Depth & Breadth of Knowledge

Your friend might be an expert player in the stock market or in mutual funds. Or he may help you with the right tips when it comes to saving taxes. However, does he understand the exact needs of you and your family? Does he know the kind of insurance cover you need to maintain your standard of living? Can he do succession planning in such a way that your family is well taken care of after your death? Unless your friend is a financial planner, most likely they may be good at one or two of these financial aspects but rarely all of them. Hence it’s necessary to invest a little time and money, in the beginning, to avoid disappointment and missteps due to bad financial advice.

Tools they have access to

Would you trust a chef that has access to the finest sharpest steak knives on the market to carve up your premium ribeye steak, or would you do it yourself with a 3-year-old blunted knife? Well, the answer seems commonsensical, similarly, financial advice is no different. Expert financial advisers have at their disposal a number of tools that make wealth management easier and more efficient. Wealth Management platforms such as Wealthfy are used by top advisors around the world to make financial decisions. These platforms have Artificial Intelligence-powered Robo Advisers to drive their decisionmaking for them and also crunch terabytes of data in seconds. These investment management platforms can make it easy to perform complex financial tasks such as portfolio monitoring, performance attribution, rebalancing and give you 100% transparency into each and every financial decision. No matter how good your friend is at financial decision making, it’s hard to beat a professional financial adviser with all these cutting edge tools at their disposal. Hence, it’s essential to consult a financial adviser when it comes to improving your financial health in the long run.

Ask your financial adviser about Wealthfy to get access to 24X7 access to your portfolio health contact us