Drawing on his personal experiences over the years, Dhirendra Kumar discusses the financial dos and don'ts for 2017 in our latest Money Hangout. See them and our answers to your queries in our video
06-Jan-2017 •Neil Borate
We often have clutter in our homes with drawers and cupboards stuffed with bric-a-brac and surplus possessions. This clutter also permeates our finances with impulsive investments made at different times that do not now suit our goals. Take a stock of them and exit the investments that are not appropriate. Eg: An FD that has been 'auto-renewed' at a low rate.
Get cracking with your investments
'You reap what you sow' goes an old adage. However if you fail to sow in time, you will not reap much of a harvest. The power of compounding causes long term investments to dramatically outperform short term ones. Beginners can start with balanced funds to get acquainted with investing.
Ignore the noise
2016 was filled with big events and each of them had a great deal of noise and media commentary surrounding them. In 2017, attention has shifted to the upcoming budget, state elections and Donald Trump. Following and reacting to these events yields little other than stress and often, poor returns. Shut out the noise.
Steer clear of credit card debt
The whole world seems to make you want to spend. Christmas Sales are launched even before the dust has settled on Diwali 'discounts'. And before you finish tucking into your last Christmas cake, 'New Year' sales beckon. However credit card debt is one of the most expensive types of debt there is. Stay away from it except in emergencies. If you already have credit card debt, pay it off before you make your investments.
Don't mix your insurance with investments
How would you feel if your doctor was also your barber? Or if your lawyers also supervised your gym workout? Insurance and investing which are usually sold together in endowment or unit-linked plans offer poor returns and little value for money. First year commissions on them can go up to 40% of the premium paid. Go for a term plan if you need to protect your family from financial insecurity but stay well away from the more exotic varieties of insurance.
Money Hangouts is a weekly YouTube Video series conducted by Value Research in association with Birla Sun Life Mutual Fund. To view other sessions and to register for the upcoming session, click here.