Investor stability and wealth management go hand in hand | Job Binary


One of the main areas of focus at this year’s World Investor Week is investor sustainability. World Investor Week, which runs from October 10 to 16, is a global campaign to raise awareness of the importance of investor education and protection and to highlight securities regulators’ investor education and protection initiatives. It is an initiative of the International Securities Commission, an international body that brings together the world’s securities regulators and is recognized as the global standard-setter for the securities sector.

This year, when our country celebrates 75 years of Independence, achieve stability of investors.
This year, when our country celebrates 75 years of Independence, achieve stability of investors.

Money management is a lifelong commitment that involves many variables—economic and market conditions, changing life circumstances, and changing goals to name a few. Despite all this, it can be difficult to align your investment strategies with your risk appetite and goals. IOSCO has listed the following stories as important for investor stability

  1. Rainy Day Emergency Fund: No amount of crystal ball gazing can prepare us for life’s emergencies. Illnesses, accidents, sudden death of a loved one or sudden loss of income – financial preparedness in the form of a solid emergency fund makes it easier to deal with such situations and ensures timely access to appropriate resources. need. Emergency funds should have a corpus big enough to cover your expenses for at least 6-8 months. Neglecting to build an emergency fund can affect other areas of your finances when times are tough, and it may take longer for your finances to heal.
  2. Recognizing the Risk Factor: A significant number of investors seek risk-free investment options for most of their goals. However, this approach to investing is flawed and significantly hinders wealth creation in the long run. In the long run, risk investing is essential to resist inflation and maintain portfolio diversity. Investments should be made after considering whether a particular investment path is suitable for your risk tolerance. Understanding the risks associated with different types of asset classes can help you maintain a flexible portfolio.
  3. Diversification is the foundation of a successful investment strategy. However, like most things in life where balance is essential to perfection, portfolio diversification must be maintained at an optimal level. Diversification ensures that the portfolio is not limited to one asset class. A proper asset allocation strategy helps in taking advantage of opportunities where it minimizes any increase in the element of risk as shock waves in one category are absorbed into the other.
  4. Budgeting for Life’s Unexpected Challenges: Keeping a strict budget makes it easier to manage your money effectively. If you make a habit of budgeting, you can reduce wasteful spending, save money for investments and emergencies, and avoid the pitfalls of debt, especially high-interest risks. A solid budget is the first step to healthy finances, because only when you stick to a budget can you carefully allocate savings that can be channeled into investments for your goals. Budgeting can also help you manage your finances wisely when inflation gets too high, because with a budget you can avoid extra expenses that would otherwise put you in a pinch.
  5. Keeping Inflation in the Big Picture: The merit of any investment instrument, especially long-term instruments, depends on its ability to generate returns above inflation. When choosing an asset class to invest in, it’s important to consider the inflation-adjusted returns the asset can generate over the short, medium and long term. Inflation can significantly erode your corpus and add taxes to the scenario, significantly reducing your actual investment returns.
  6. Staying Vigilant: A successful investment journey is based on an investor’s desire to be aware of the external elements affecting his investments and the ever-changing trends in the financial space. A careful approach to money management will help you avoid inappropriate investment paths. Also, proper financial know-how can prevent you from becoming a victim of financial fraud and scams.

The COVID-19 pandemic has been a test of investor resilience, and it has brought many lessons for the investment community to learn.

In mid-2020, many investors who got into the market early tasted success and built their portfolios, the index gains were so secular and broad that there was no correction and investor patience was never tested. Big and persistent bull markets are also risky, investors forget that there can be periods of correction and consolidation where you give up some of your gains or see no returns for a while. For investors to be sustainable in the long game, it’s important to develop the foresight to distinguish between situations that warrant an exit and situations that are knee-jerk.

Action points

  • If you’re new to the world of money management and want to talk to experts to help you create an investment plan, start reading personal finance topics online. Never follow strategies recommended by friends and family.
  • Don’t underestimate the importance of insurance in protecting the health of your finances and the future of your loved ones in the long run.

Disclaimer: An investor education and awareness initiative by Aditya Birla Sun Life Mutual Fund.

All investors must go through a one-time KYC (Know Your Customer) process. Investors invest only in SEBI registered mutual funds. For more information on grievance redressal including details of KYC, SEBI list of registered mutual funds and SEBI SCORES portal, please visit: https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal. .

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.



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