In India, we still have a lot of ground to cover when it comes to awareness and adoption of financial instruments for future planning. While there is an uptrend, it still leaves much to be desired. According to data from a study done by the National Stock Exchange (NSE) and released in September 2023, the total number of unique investors directly investing in the stock market surged to 80 million for the first time. While the 80 million unique PAN (Permanent Account Number) investors correspond to approximately 50 million unique households in India, it amounts to only around 17% of households directly investing in the Indian stock market.

These numbers highlight the crucial gap in the understanding of how to manage money for a more fulfilling life and urge us to move forward mindfully.

By expanding our financial knowledge and embracing diverse options, we can aim for a hassle-free and financially secure life even after retirement. So, let’s make 2024, the year we take control of our financial destiny and dive into the exciting world of finance.

Resolution 1: Build an emergency fund

Life is full of surprises and emergencies can knock on our door anytime. Therefore, being prepared is necessary. Here comes the role of an emergency fund.

Think of an emergency fund as your financial safety net for those unexpected moments in life, just like our previous generations saved money from household expenses and tucked it away to meet emergency expenses.

The general thumb rule is to have enough in the emergency fund to cover about 3-6 months of expenses. Make sure your retirement fund remains in a separate account, not connected to this account.

Resolution 2: Improve credit score by paying on time

A credit score is similar to a financial report card that lenders look at very closely. A higher credit score increases the chances of getting that loan when you need it while a poor score may make the process longer.

Financial service providers, such as those offering credit cards or loans, may share your debt information with credit information companies. These companies then assign a credit score based on your debt payment patterns. Therefore, maintaining a good credit history can pave the way for a higher credit score and better financial opportunities such as lower interest rates on loans and credit cards. Lack of credit history may affect your score and chances of getting a loan. Ensuring timely payment of dues and avoiding defaults can go a long way in improving credit scores.

Resolution 3: Retirement remains in focus

While it is common for people to postpone saving for retirement, starting early is the best strategy. No matter how old you are, it is essential to prioritise investments in your retirement accounts. Take the lead in creating a retirement plan and establishing a robust strategy, starting with an account that offers low risk, high accessibility, and decent returns for a financially secure and comfortable retirement. Remember, it is never too early to start planning for your future.

Resolution 4: Diversify investment options

Save more and invest more never goes out of fashion. By investing more, you will have a bigger opportunity to expand wealth and ensure a stable financial future. Diversify your portfolio, understand the risks involved, and make informed decisions while weighing the advantages of wider instruments for better risk-reward management. Mutual funds as financial products provide a wide range of solutions for different goal posts in your life, as well as for diversification.

Conclusion

Researching the options and choosing the investment tool that suits your requirements are essential. Let us make 2024, the year we all level up our financial savvy, making wise choices and taking charge of our financial well-being. By doing so, we are not just safeguarding our future, but also laying the groundwork for a prosperous one. Here’s to a future where everyone can experience the joy of financial independence!

References

Source: https://www.business-standard.com/markets/news/india-s-unique-investor-counts-top-80-million-for-the-first-time-nse-data-123092801141_1.html

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers.

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