Make a pledge to attain financial freedom this Republic Day

On January 26, every year India celebrates Republic Day to honor the day when the Indian Constitution — the largest for a sovereign nation — came into effect.

The Constitution is regarded as the supreme law of the land and is the foundation of our vibrant democracy. The six fundamental rights which are guaranteed to all citizens are also enshrined in the Constitution of India.

This Republic Day, as we celebrate the passage of another year in the history of independent India, let us also make a pledge to work towards financial security and financial independence in the true sense of the term. Here are a few things that you need to include in your pledge to acquire financial freedom.

Budgeting is the building blocks of financial success:

Lessons on budgeting and spending prudently may seem too antiquated but there is a reason why it is considered a cardinal rule for maintaining sound financial health. Without a proper budget plan, it is very easy to get carried away and let expenses pile up leaving you little room to invest for your goals or create a stash that can come in handy on rainy days. In the long run, every penny that gets spent on an indulgence or an unnecessary expense would have helped you immensely in capital appreciation should you have invested it in appropriate assets.

While this is not to say that you should deprive yourself of the joys of life, but the goal should always be to maintain a balance between your desires and building a safety net for your future. This is where a budget comes into the picture – it is akin to a roadmap that gives you a clear idea of the amount that you can save, invest and splurge on each month without compromising on your goals.

Stay away from the loan trap:

In the world of personal finance, loans are double edged swords. Yes, loans can be life savers: in the literal sense of the word but they can also push you into a financial hell hole of sorts if you are not prudent with your loans and credit card usage. The sentiment that you can always pay your card bill or EMIs later on can lull you into a fall sense of complacency and make you spend more than what you can afford.

Also, in this age when there are no dearth of lenders who provide instant loans, it is important to remember that not all of them are reliable. There are too many digital portals where you can avail loans in a matter of minutes but not all of them have transparent policies and you may end up paying way more than what you bargained for. Recently, the government took cognizance of the growing dangers posed by such apps. The RBI is expected to issue a slew of guidelines to regulate digital lending and recently Google blocked hundreds of such apps from its Android app store. Legit lenders that are recognized by the RBI and follow documentation processes are the way to go if you need loans.

Being dutiful towards your investment plans:

Amidst the humdrum of life, it is common to get entrapped in a false bubble of contentment when it comes to managing money. We often tend to think that as long as we are investing and saving at regular intervals, it should be enough to help us meet our financial goals.

However, wealth creation is a marathon and not a sprint – you leave too much to chance if your harbour the notion that investing at one go and then forgetting about it is a savvy move. Building investments are akin to nurturing saplings – time and again you have to check whether the sapling is getting enough sunshine, water and nutrients. Similarly, with changing economic scenarios, life goals and financial obligations, you have to keep an eye out on your investment strategies and fine tune them frequently to make them align with your needs and risk-taking abilities.

Embracing new-age asset classes without fear:

In India, generations of retail investors have equated investments for their goals to parking money in fixed income instruments, real estate or gold. Poor financial literacy levels and a lack of awareness have kept them away from venturing into any kind of investments that have an element of risk. This has made them lose out on wealth creation opportunities.

However, with the advent of sophisticated digital apps that have not only simplified investing but are also empowering investors with the right kind of financial knowledge, it is time to let of unfounded cynicism and approach your investment practices with a fresh perspective. Fears of asset classes that carry risks need not refrain you from investing in them – in fact, mutual funds can be a great starting point if you are still figuring out the investment ropes. There are mutual funds that can cater to all kinds of risk tolerance capacities and goals – be it retirement investing or investing for a vacation abroad. You can start investing with as little as Rs 500 through a digital investment portal and keep monitoring the performance of the fund constantly.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

म्यूचुअल फंड निवेश बाज़ार जोखिम के अधीन हैं, योजना संबंधी सभी दस्तावेज़ों को सावधानी से पढ़ें।