Portfolio management: Top 5 ways to strike balance between savings and spends

Portfolio management: List your financial goals and divide them between short-term goals, medium-term goals, and long-term goals, believe experts. (iStock)

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Portfolio management: Saving, spending and borrowing are ways of moving money across time. The right balance depends on your reading of your life’s timeline, which is intensely personal, because the right answers aren’t obvious. For example, young people should save more to plan for retirement. Young people should also spend more, so they enjoy travel, learning and all that life has to offer while they are young. A family with young children may want to save, in anticipation of college tuitions.

On how to strike a balance between savings and spending, Prithvi Chandrasekhar, President – Risk & Analytics at InCred said, “The most helpful thing you can do to manage money better is to plan your broader life better. As you become clear on the transitions your family will live through in the coming years, the right trade offs between spending and saving become obvious quickly. Without that perspective, money management will be confusing and intimidating.”

Advising earning individuals to avoid shiny object syndrome, Vinit Khandare, CEO & Founder at MyFundBazaar said, “It’s easy to let one’s contributions to retirement slide because there are so many shiny objects within reach financially. Instead, be sure to stay the course with one’s own investing.”

Savings vs investment: How to make money when you sleep

Vinit Khandare went on to add that one should make money even when he or she sleeps citing, “Making a small but regular deposits into a savings investment that will compound will allow one’s money to grow while one sleeps; every pay-check/month they deposit no less than an agreed set amount into this investment to watch the returns multiply over time.”

Highlighting the importance of goal setting, Abhijit Shukla, CEO and Director at Tarality said, “List your financial goals and divide them between short-term goals, medium-term goals, and long-term goals – prioritising all your goals will help you list them in the respective categories automatically.”

To 5 ways to balance savings and expenses

Asked about the top measures that may help an investor strike proper balance between one’s savings and expenditures, Mayur Shah, PMS Fund Manager at Anand Rathi Advisors listed out the following 5 ways:

1] Goal setting: Define your goals to achieve both in short term and long term.

2] Goal-centric investments: Keep dedicated investment for specific goal so that no misuse or diversion of funds happen for other goals.

3] Priority to various savings: Regular savings should be given priority and try to postpone spending which can be postponed and not an urgency.

4] Liquidity for financial crisis: Emergency and short term goals investment to be kept in liquid and balance for long term in little high risk return assets.

5] Allocating for asset class: Minimum 30% of income needs to be saved and channelise in investment asset class.

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