25 March 2021
Excited to welcome spring and celebrate Holi, most colorful festival of the year? The festival not just reiterates the happiness of being together and embracing each other irrespective of our differences, but also reminds us to get over the evil.
This year, you can make Holi more colorful and merry with your financial portfolio. As the festival of color is approaching, we share with you 5 ways to make your financial portfolio brighter and more colorful.
First step towards financial happiness begins with decluttering. Just like the bonfire on the night before Holi marks the burning of Holika or victory of good over evil, begin with paying off bad debt. Cleaning financial clutter needs time but should be done quickly as they cost you more in terms of interest rate and also erode the potential tax benefits and poorly impact your credit score and creditworthiness.
As a rule of thumb, steer clear of any form of bad debt or debt for debt, review your bank statements and credit card statement to trace financial clutter. This way you can improve your CIBIL score and get much better offers and interest rates on your future debt applications. It’s a double-edged sword which must be used with caution. However, if you face a cash crunch, stemming from temporary cash-flow problems or emergencies, evaluate your options and choose the right lender. Borrow from reputed financial sources, such as banks or instant cash loan apps such as EarlySalary, that offer loans at rates as low as ₹9/day.
Get inspired from the hues of the festival and take a step towards portfolio diversification to reduce your risk exposure and increase return potential. Follow the age old saying- don’t put all your eggs in the same basket.
A well diversified portfolio should have both market-linked assets which have earning potential of above-average returns and fixed income securities such as bonds, fixed deposits, etc. Some instruments for market-linked instruments are index funds, equities, Systematic Investment Plans or SIPs. This will make sure that your financial wealth grows with the variety of financial instruments just like your excitement from that assortment of gujiyas and laddus. Invest more, spend more!
Wise spending and smart investing are just the tip of the iceberg. The real challenge is in maintaining a good portfolio and churning at the right time to maximise your wealth. Just as you get together with your friends and family to celebrate Holi amid your busy schedule, make sure you sit with your loved ones to discuss future financial goals, evaluate present investments and check if your portfolio is in sync with your goals and market movements. Check if your portfolio returns are beating inflation and if not, then they may need a churn.
Just like you check the goodness of sweets and quality of colors during Holi, make sure you check fundamentals such as vintage, credit rating in bonds and other funds, dividend history and most importantly the economic moat. Fundamental analysis can take you a long way in value investing and help you create wealth.
Market euphoria is a real phenomenon so watch out for the bubbles and hedge your market exposure accordingly. Follow the advice you give your kids on Holi, to play safe and not to be over enthusiastic. Evaluate your risk appetite and take money decisions accordingly. You can also take a financial advisor’s help to build a portfolio and play safe.
We hope this Holi is full of pretty purple, bright blue, and sun-kissed gulaal and so is your finance. Amid the pandemic, hold on to the spirit of the festival and add colors to your boring and morose portfolio with the above tips.
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