You need to tame 10 Ravanas before you go from prince to pauper

It’s that time of year when we celebrate festivals commemorating the triumph of good over evil and the defeat of demons.

When it comes to our finances, there are some demons that, if not tamed, could irrevocably destroy our wealth. That’s why it’s important not only to identify these demons, but to defeat them to keep our finances healthy.

Here are ten demons that, if not tamed in time, could actually destroy our wealth.

1] Market Timing: Ideally, you want to buy stocks at the lowest price and sell at the highest price. Yet even the most successful investors fail to time the market. Instead, it’s important to make long-term investments on a regular basis. Investing regularly and consistently in the market is the key to wealth creation. If you try to time the market, you are likely to end up losing money. Instead, spending time in the market is important.

2] Blind investment without a goal: When you’re preparing for a marathon or trying to lose weight, you have a goal in mind. This is how you train accordingly. The same applies to finances. When investing, it’s important to understand your end goal. Depending on the amount you need and the time left to reach your goal, you need to choose your investment vehicle and strategy. For example, if you need retirement benefits after 25 years, you can invest most of your money in stocks. However, if you need to fundraise for your daughter’s wedding in two years’ time, it may be wiser to invest in a safe option such as a term deposit.

3] Impatience: Market trends are natural, and it is impossible to get rich overnight. Also, reacting to market volatility in the short term doesn’t help. A big mistake investors make is that they become impatient and want to make a quick buck. Often, this lack of patience can hinder long-term wealth creation.

4] Chasing returns: It is important to understand the relationship between risk and reward. Risk and reward need to be balanced. As a rule of thumb, don’t chase what others have already received in return. Your needs and goals are different, as are your risk readiness and return expectations. If your investment fundamentals are in place, the returns will come. “Stocks can bring a lot of pain. Black Monday and hairy Friday can happen anytime,” said Hemant Beniwal, a certified financial planner and director of financial planning firm Ark Primary Advisors.

5] Taxes not planned: Tax planning is also important when looking at any investment. For example, when looking at the return on a term deposit, look not only at the return, but also at the tax that needs to be paid when it is due. Therefore, it is important to plan your taxes and take advantage of the deductions available so that your investments are tax efficient.

6] Failure to Diversify: As the saying goes, you should never put all your eggs in one basket. Investing requires diversification across different asset classes based on your risk appetite. Investing all your money in stocks or debt is not a smart move. Even within asset classes like stocks, you have to diversify your investments into different stocks or stocks that belong to different industries. Not diversifying your portfolio can destroy your wealth in an instant.

7] The following trends: As far as the latest fashion trends are concerned, it may seem okay to follow trends, but as far as your finances are concerned, it certainly isn’t. must be strictly avoided. Sometimes the desire to make a return in a short period of time can tempt people to invest in the latest fad or craze without proper due diligence, and more often than not, the fad is outdated and can lead to losses.

8] Tip-Based Investing: Following popular investing “tips” is one of the surest ways to make investing mistakes. While you should discuss your investments with your financial planner, it would be a serious mistake to invest or buy financial products based on tips from colleagues or tips you may have come across on social media. Every “tip” you receive should be analyzed for its merits before you follow them.

9] Over-monitoring: Our portfolio should be monitored and reviewed on a regular basis (every six months or a year), but we should not make the mistake of over-monitoring. The stock market goes up and down every day, and monitoring your portfolio every day is not only a waste of time, but it can also create undue stress and make you make bad decisions.

10] Extract a long-term corpus for short-term needs: Our goals can be divided into short-term goals (going on vacation, buying a car) and long-term goals (saving for the future of our children and retirement). Long-term goals can be achieved by investing regularly over the long term and benefiting from the power of compound interest. However, if one withdraws money invested in long-term goals for short-term needs (for example, if you redeem a mutual fund invested in building your retirement corpus for European travel), then you will be making a big mistake because you long-term goals will be in jeopardy.

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