4 ways in which you can light up your finances this Diwali

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SAMVAT 2077: 4 ways in which you can light up your finances this Diwali

Diwali in India is associated closely with ‘financial prosperity’. The festival of lights, as evident, is set to be quite different this year, and the reason isn’t hard to guess.

With the economy and markets upended by the COVID-19 pandemic, the same has doused the enthusiasm of one of India’s biggest festivals to some extent.

Having said that, a little planning, patience, and discipline can help you realise the true essence of the festival and brighten up your finances for a better tomorrow. How can you do so? Let’s find out.

Arm Yourself with the Requisite Knowledge

A lot of financial ill habits stem from a lack of knowledge. Investing basis tips and tricks shared over SMS and advice from peers more often than not are likely to backfire. Note that every financial instrument is different in structure, serves a specific need, and carries risk.

You need to understand them and proceed when you have a holistic understanding and know the goals you want to achieve. With the right knowledge, you can steer clear of the pitfalls and make an informed decision.

Courses on various aspects of finance and investments are widely available over the web from established financial institutions enrolling in which can help you be prudent with your money.

Invest to Enhance Your Wealth

Money lying idle in a bank’s savings account or at home is of no good. Though your savings account earns a nominal interest, it’s not enough to beat the effects of inflation. Therefore, you need to invest in various financial instruments that can help your money grow and compound.

A mix of fixed-return and market-linked products is an ideal way to invest as it helps you diversify your investments and gain across market cycles.

For instance, while you can keep a portion of your money in bank fixed deposits, invest the other portion in capital markets to earn inflation-indexed returns. You can either invest in direct stocks or adopt the mutual fund route.

Depending on your risk appetite and investment horizon, you can also look forward to corporate bonds, sovereign gold bonds, exchange-traded funds (ETFs), etc., to grow your money.

Avail Insurance

Hedging you and your dependents financially in the midst of an untoward incident, insurance is not a want but a need. Even the soundest of financial plans can go haywire in no time in the event of a contingency, and insurance gives you the much-needed monetary support during trying times.

Life and health insurance are two critical components that must be taken with the utmost care and reviewed periodically. Life insurance in the form of a term plan ensures your dependents are not left in a lurch in your absence, and health insurance in the form of a ‘family floater’ policy ensures your savings remain intact during hospitalisation.

Apart from the uncertainty induced, the COVID-19 pandemic has brought to the forefront the need for insurance more than ever. Thanks to digitalisation, you can avail it with a few clicks online.

Avoid Instant Gratification

Easy availability of funds coupled with lucrative offers, has made it easy to satisfy lifestyle related needs. Instant gratification leads to discretionary expenses that can hurt your finances and hamper crucial life goals.

With pressing liquidity, it’s all the more essential to focus on needs and keep wants on the backburner. Get to the drawing board to re-arrange your finances, chalk out a budget, identify wants, and filter them.

At the same time, set-up auto-pay for essential commitments such as loan EMIs and utility bills, among others, to ensure a solid credit score. A good credit score helps in the easy procurement of loans in the future, should the need arise.

Summing it Up

As evident, turbocharging your finances this Diwali warrants a solid understanding of the finer details of various investment avenues and ensuring making rationale money decisions. Doing so ensures your Diwali and finance always remain colourful and brightened. Happy Diwali!

(Rahul Jain is Head Edelweiss Wealth Management)

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.