How to manage Financial Anxiety in times of Crisis
In recent years, global events such as the pandemic and high inflation rates have caused financial stress for many. However, it is important to understand that our certain habits and behaviours can contribute to this anxiety. To alleviate these concerns, disciplined investors must focus on what they can control and not worry about external factors.
To reduce challenges and manage financial anxiety, consider these steps:
- Not trying to time the market: Timing the market and making decisions based on fluctuations is often ineffective. Instead, follow broad principles of asset allocation and diversification to ensure stability in your investments.
- Develop a financial plan: Creating a well-thought-out financial plan is crucial. This includes daily budgeting, planning for contingencies, saving, and designing a diversified portfolio.
- Don’t disturb long-term investments: In addition to asset allocation and diversification, it is important to maintain discipline and not interfere with long-term investments. This not only helps maintain consistent returns but also protects against suboptimal returns due to frequent changes and behavioural biases.
If the process of managing financial anxiety seems overwhelming, consider seeking professional help from a financial advisor who can guide you in the right direction.
(Contributed by Kritika Saini, Assistant Manager Team Sukhoi, Hum Fauji Initiatives)
Delaying Investing or Delaying Reaching your Crucial Financial Goals?
- Money lying idle often gets spent – If you have cash sitting in a bank account waiting to be invested, it’s likely to get spent on consumption instead, generally on things which you don’t need or are not important to you in the long run.
- The cost of delay is high – If you delay investing for just one year, you’ll likely have to pay approximately 15% more each month to achieve the same results. In the long run, delaying your investments in equity assets will likely cost you, rather than benefit you by waiting for a correction.
- It’s impossible to predict the market – It’s practically impossible to accurately predict how the market will behave in the short term. And in a growing economy, markets will always go up in the long term at a rate which no other investment avenue can match.
A smart way to overcome these obstacles and start investing is to begin a Systematic Investment Plan (SIP). SIPs not only help you avoid timing the market, but they also make it easier to invest with smaller, manageable instalments. With a SIP, you can stay disciplined and focused on growing your wealth.
Don’t delay your investment decisions any longer. It’s time to take action and start moving towards the future you desire.
(Contributed by Shaheen Akhtar, Relationship Manager, HNI Desk, Hum Fauji Initiatives)
Five Habits of Highly Successful Investors
- Invest for the long-term – When starting, focus on long-term goals instead of seeking quick profits. Experienced investors understand that wealth takes time to build. We all have heard about Billionaire long-term value investors but probably no Billionaire short-term traders.
- Right asset allocation – Successful investors weather market ups and downs with a well-diversified portfolio. Before investing, assess all your financial assets to make informed decisions.
- Purposeful investment – Successful investors have specific financial goals and make intentional, strategic investments. Developing a plan is easier when you have a clear idea of what you want to achieve, eg, buying a house in eight years or expensive education for children 10-15 years later through equity-heavy mutual funds.
- Diversify investments – Spread your money across various investment assets, such as gold, real estate, fixed and recurring deposits, mutual funds, stocks, debt instruments, and more. This diversification helps minimize risk and protects your investments in the long run.
- Stay disciplined – It can be tempting to seek safety when the value of your investments drops, but it’s important to stay committed to your plan and not react to short-term fluctuations.
Investing may seem complex, but long-term success requires adopting these simple yet effective habits.