BUSINESS

Stay focussed on your investments

If Goods and Services Tax (GST) rate on international airfare rises, how many of us will cancel our foreign vacation with family?

Similarly, if the government reduces GST on hiring of banquet halls in hotels, how many of us will hurry into getting our son or daughter married even though they are pursuing higher education to take benefit of the lower GST?

Though it is true that the GST rates do impact our lives and also the cost of living, that is something which is not in our control.

Equally true is the fact that many financial goals of our life have to be fulfilled, even if something beyond our control, such as a rise or fall in GST rates, occurs.

Financial responsibilities

Some of these goals could be in form of our family financial responsibilities such as funding the education of our children, getting them married, our retirement and the like.

There could also be certain dreams and aspirations such as going on a foreign vacation with family and purchasing a bigger car.

A lot of these do not change simply because either GST or, for that matter, most other taxes and levies in the country increase or decrease. Yet, we keep focussing on GST rates and other taxes. Several times, as financial planner, I encounter individuals who procrastinate, delaying financial planning and investment decisions because the Union Budget is in the offing or the GST Council will be holding a meeting to decide on the rates. These are just excuses to avoid the discipline that we have to impose on ourselves with regard to financial planning. However, it is detrimental to our wealth creation.

The best way to deal with any kind of wealth creation and achieve our financial goals is to plan and invest. So, instead of referring to GST as Goods and Services Tax, the goal must be Goal Savings Target.

First, make a list of all financial responsibilities and dreams.

This can be called ‘My GDP – My Goals and Dreams Plan.’ Prioritise them. This will help in getting focus and ease allocation of funds for each goal. Decide the amount that will be needed to fulfil those financial goals. There are enough calculators available on Web that will help in calculating the monthly amount needed to meet those financial goals. In case there are some inhibitions in making calculations, take the help of a qualified person.

Set priorities

It is not always possible to have enough surplus every month to invest towards our future goals. The moment goals are prioritised, it is easier to take a decision. Goals that are high priority need allocation of money first, and so on and so forth.

Another benefit of listing and prioritising financial goals is to decide where to invest. Options could be investing in the stock markets, gold, fixed deposits, bonds or real estate. Also, consideration can be given to whether the investment be made directly or should mutual funds be considered as a vehicle. There could be a few other investment vehicles available that can be considered. Lastly, deciding on financial goals, calculating the amount, allocating funds are all steps in bringing about focus.

Focus always helps in optimum utilisation of resources. Making ‘MY – GST’ will help bring focus so that ‘our financial resources’ viz. income from ‘our routine earning’ and returns generated from ‘our investment’ help in achieving ‘My GDP.’

Family support

As a practitioner, it is very common to get a comment from a family member, housewives and older children saying “I also want to contribute towards a particular financial goal that the family is investing for.”

As individuals, we want to know the end goal and also belong to an activity where the end result is known. Thereafter, every time there is some saving and investing, there is a sense of achievement as it lends clarity to our purpose.

Giving direction to our investments gets us focussed; choosing an investment vehicle and asset class becomes easy; we refrain from copying others or relying on any rumours; and, there is family support.

(The author is a financial planner and the author of Yogic Wealth)

Deciding on financial goals, calculating the amount and allocating funds are all steps in bringing about focus.. Focus also helps us optimally utilise resources

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