There is a lot of advice and information doing the rounds, informing people what they should with their money.
However, it is equally important to be aware of what you should not do with your money. Here are five things that you must be wary of while dealing with your money.
1. Don't stash your money in a savings bank account
The importance of liquidity notwithstanding, don't make the mistake of stashing away all your money in your bank account. Investing and doing so at a regular basis is of prime importance.
The earlier you start the better chance you have of meeting your goals. Maintain a reasonable cash balance which will help you to deal with your regular expenses and emergencies; any additional monies can be judiciously invested. Remember earning 3.75%-4.00% p.a. on your savings bank account is not a smart move.
2. Don't invest your money based on hearsay
Having stated the importance of not keeping money idle, don't start investing without understanding your risk profile and investment objectives. Your investments should be triggered by your needs and an accurate assessment of your risk appetite.
Brokers and investment advisors whose key selling point is 'brokerage or commission returned' or making investments based on 'tips' should be avoided. Look for credible and qualified investment advisors for managing your investments.
3. Don't manage your money without a proper plan
Ensure that you have a financial plan in place and that you rigidly adhere to the same. Set realistic goals and allocate funds for the same.
Trying to manage your money without a proper plan is like a recipe for disaster; putting a plan in place helps you steer clear from impulsive spending. Pen your incomes, regular expenses on a paper and find out how much you save each month. Now allocate your savings towards achieving your stated objectives.
4. Don't invest all your money in the same avenue
Whatever your preferred investment avenue is, ensure that you don't invest all your money in the same place. Diversification is a must.
Even if you are a risk-averse investor who prefers only assured return schemes, broaden your horizons by investing across products in fixed deposits, small saving schemes etc.
5. Don't lose track of your money
Closely monitor your cash inflows-outflows and investment portfolio.
Market conditions, interest rate fluctuations, inflation rates and a host of other factors have an impact on your money and its worth.
Your approach to managing your money needs to be a proactive one after factoring in all these aspects. It's your money and you have to ensure that it keeps working for you.
