This Holi, Add Right Colours To Your Wealth
And here comes the most awaited day of the year. It’s Holi! So, what plans do you have for celebrating this festival of colours? Are you ready with the set of different colours, sweets and other things that you would require to play Holi safely? Of course, you would be, as you waited for a complete year to celebrate this day. Holi is considered the festival that brings colours to the life. But do you know you can add those brightening and lovely colours to your investments as well? Let’s have a look which colours you can add to your .This Holi, don’t just add colour to your life. Take a step ahead and add some vibrant colours to your financial portfolio.
Similarly, if we want our investment portfolio to paint a happy picture, we must give it a good palate of colours (asset classes), each with their own distinct characteristics:
- Add Green to Your Portfolio: The Colour of Debt
The colour green signifies balancing your new beginning, and in the case of mutual funds, investments debt is considered to be a balancing fund. There are some low risk debt investments such as corporate fixed deposits, debt mutual funds, bonds and NCD’s help in keeping the portfolio safe even in the volatile times. So you must add the colour of balance, i.e, green to your portfolio by investing in debt funds to attain financial stability.
- Add Red to Your Portfolio: The Colour of Equity
The colour red symbolises purity. Keeping equity funds in the investment portfolio would be highly beneficial for the investors to make their financial life secure. You can add this colour by making investments in the equity funds, stocks and shares of the companies. This brings you not only the benefit of capital appreciation but also would be able to achieve your financial goals with ease. This will ensure your portfolio is well equipped to combat inflationary pressures over a long-term horizon. You can do a SIP in mutual funds. A SIP will enable you to invest small amounts of money in a stock/MF/index ETF and build a sizeable corpus over a period of time.
- Add Yellow To Your Portfolio: The Colour Of Gold
Nothing symbolises the Yellow Metal better. Take the inflation by its horns by hedging your portfolio with gold. This time do it the smart way by opting for Gold ETF instead of physical gold such as coins or bars. Gold ETF’s are the preferred vehicles for investing in gold as they are more tax efficient than physical gold, easy to buy and sell, available in small denominations, and can be kept safely in the demat account without incurring a storage cost.A SIP in Gold ETF would be a good way to invest if you want to buy gold after several years .You can buy gold units at various points in time, averaging out the price at which it is bought and build a sizeable portfolio over a period of time.
- Add Purple To Your Portfolio : The Colour Of Real Estate
Purple, which symbolises royalty or luxury, is what real estate adds to your portfolio. It is a large sized investment as compared to equity or gold but it offers a good hedge against inflation. Because of the sheer size of investment every real estate buyer looks for the perfect price of the property as every penny saved translates into big savings.
THREE INVESTMENT LESSONS FROM HOLI:
- Diversify portfolio like a dash of different colours: Always diversify your portfolio across different asset classes. Diversification helps you reduce volatility and risk associated with different assets. Each asset has a certain amount of risk associated with it. However, one must remember that every asset including fixed income products carry some risk. Usually returns are higher for riskier assets and vice versa. Hence a good, well-managed portfolio seeks to secure stability in returns and mitigation of risks by diversification.
2. Invest in instruments which give you happiness: Holi is all about fun and frolic. Do not invest in instruments which you do not like or understand. At the end of the day, investing is all about long-term capital creation. It needs a lot of patience as well as confidence in your investments. You can never be patient with any process unless you enjoy it. Hence, whatever you invest in should give you happiness. So while characteristics of every investment instrument is important, your temperament and attitude towards risk is also equally important to determine the best composition of your portfolio.After all, good health and happiness are without doubt the best results of anything you do in life, including investments
- Get rid of the evil of debt: Holi is a festival which signifies the win of good over evil. The tradition of burning Holika signifies the burning of all that is bad, because only after that one can enjoy one’s life. Similarly, if you want to prosper in your life and accumulate a nest egg sufficient enough to last you through your golden years, then only saving and investing your hard-earned money is not enough. You also need to get rid of the evil of debt as soon as possible. For, in the absence of a good debt-management strategy, the financial planning for your secured future can not only get topsy-turvy, but awfully wobbly as well. Remember, the less debt you have, the happier and wealthier you will be!
Now, many of us have the tendency to invest in just one favourite asset class. But Holi wouldn’t look as bright if you played with only one colour, would it? So why invest in just one asset class? Fill up your investment portfolio with different assets classes in the right proportion as per your needs and suitability to your financial picture.
Hope you and your family had a nice Holi! Now wish your investments a Happy Holi!
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Written By – “Anusriti Jana”