4 Money Lessons from Diwali
Diwali is the festival of lights, and we all
celebrate Diwali with lot of pomp and enthusiasm. Families clean homes, get
together, exchange gifts, light lamps, etc. It is also the time when many
people make big ticket purchases.
However, Diwali is more than just a festival, as it
can impart financial lessons.
In this article, we will learn about the different
money lessons that we can learn from Diwali.
1. Cleaning up your portfolio
Cleaning our house, throwing out clutter, painting
our house are some few things that we do to prepare our homes for Diwali. We
can apply the same principle to our investment portfolio.
We see that many investors invest in several funds
of the same category or continue investing in funds that no longer serve their
investment goals. Reviewing your portfolio regularly is one of the essential
financial planning habits that you can incorporate in your life. It will help
you figure out the laggards in your portfolio that are negatively affecting
your portfolio or do not serve your financial goals. It will ensure that your
portfolio performance is optimised and you can achieve your goals within the
time limit.
2. Light the lamp of financial literacy
Lighting earthen lamps or fancy lights is one of
the integral aspects of Diwali. Light helps to dispel the darkness. The lamp
can also signify knowledge that removes the darkness.
Similarly, when you are investing, it is important
to know the difference between myths and facts, your financial goals and risk
tolerance to avoid financial mistakes.
Reading books and articles on investing, attending
workshops, visiting a professional will help you invest correctly and avoid
mistakes.
In absence of financial literacy, investors may be
susceptible to committing mistakes such as selecting a wrong fund or chasing
after short-term returns by following the footsteps of their friends and
relatives.
Identifying the financial mistakes and steering
clear from these mistakes will help to fulfil your financial goals.
3. Play Safe
Many people enjoy celebrating Diwali with fireworks
and crackers. Adherence to safety measures and ensuring precautionary wayswhile
using firecrackers can help us have safe Diwali and enjoy it to the
fullest.
In the similar way, it is important to safeguard
you and your family members’ lives through adequate life cover, health
insuranceand other insurance covers. An emergency fund will come in handy to
deal with unforeseeable emergencies such as job loss and urgent house repairs.
It is essential to take care of these elements before investing in mutual funds
or other investment options to fulfil financial goals.
4. Diversify your portfolio
Diwali is incomplete without a wide variety of
sweets and an assortment of nuts, dry fruits and chocolates. We see a great
variety in gifts, sweets andrangoli colours.
Similarly, diversification of your portfolio will
allow you to optimise the performance of your portfolio and minimise risks. A
diversified portfolio with different asset classes such as equities, debt and
commodities will optimise your portfolio’s returns across different business
cycles.
Conclusion
Diwali is a joyous festival, and the various
aspects of the festival can teach us various money and financial lessons that
we can implement in lives to fulfil our financial goals.
Reviewing our portfolio regularly, cleaning the
clutter, studying about the different aspects of investment from the right
sources, insuring our risks, keeping an emergency fund and diversification of
our portfolio are some financial lessons that we can take from the festival of
lights.
If you want to fulfil your financial goals and
haven’t invested in mutual funds, this is the right time to invest in mutual
funds and plan for you and your family members’ future.
Talk to mutual fund distributor or advisor to know
more about mutual funds. Happy Diwali!!
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