Happy new year 2021!

As we all celebrate to welcome the new year, let us focus on our well being. The year 2020 has taught us lessons of a lifetime. The importance of emotional health. When can we have good emotional health? Only when our family is healthy and safe. Our family is the biggest asset we have. We have supported each other during this period of turmoil.  We are still not out of the woods. We need to continue supporting each other for much longer! On the financial side, the last one year has taught us to plan for the unplanned.

Many of us have experienced turmoil on the job front. The entire travel and tourism industry has passeD through a very difficult period of time. Some of the best paid people have had to face intense hardships. There was hardly any warning about what is going to happen a year back. This has highlighted the need for maintaining a good emergency fund. Six months of expenses including EMI is the bare minimum recommended. However 1 years’ expenses including EMI is recommended. There was some respite provided by Government and RBI by implementing the loan moratorium. However, it only had the effect of adding the EMI payments to the outstanding principal. There was some gift from the Government in refunding the interest on interest. However this again was a small support at best.

The year 2020 has been extraordinary for the stock market. We have seen a dramatic 40% decline in the Nifty 50 Index and an equally dramatic 85% up move from the year’s bottom. Neither of these were anticipated. Stock market is known to be volatile. But this extent of volatility is hardly expected. We now understand in hindsight that one needs to “Expect the unexpected”. How does one negotiate such a roller coaster ride? The simple tip for a roller coaster is to use all the safety features provided. We use the seat belts and the other safety devices before the roller coaster starts to move. For the stock market, you need asset allocation to help to navigate this and stay safe. There are market pundits who say the market is too high now. However unless we ride this bull market, we cannot beat the inflation. So you need to stick to your asset allocation. You can do an yearly re-balancing. This is all you need to do. And it does not take much time. You need to focus on your job and leave the market to do its job! 

Financial planning is not rocket science. You are your best planner. As a DIY investor, all you need is to educate yourself on financial planning.  Once you have a decent knowledge on financial planning, you can take good care of your finances on your own. If you require a review, you can always hire a fee only planner. As a professional, we planners will help to identify any blind spots which you may have. If you are interested in getting your plan reviewed by me, you can reach out to me.