It's time to Reflect, Refocus and Recharge

Dear Readers,

The start of a New Year creates opportunities for everyone to turn over a new chapter and redirect one's course, no matter how the previous year has gone. I remember a short story told by Mr.Stephen Covey, a man was working hard to chop down a tree. He exhausted himself moving a dull saw back and forth without making any real progress. Then a stranger stops by and asks the man why he did not pause to sharpen the saw. He said "I don't have time."

The moral of the story is that we all could use a little saw sharpening in our lives. New Year is good time to take a little pause and reflect, refocus and recharge yourself.

Today, I am sharing few action points that I follow every new year. I am sure this will be of some help to you get in the right mindset for the new year:

1. Do a Financial Health check-up with your adviser or do it yourself and assess the performance of your investment portfolio over the past year. It is important to be aware of your progress. If you have not created a financial plan, this could be right time for you to get going.

2. Re-examine and Re-balance your Asset Allocation. We must review our broad asset allocation annually. Your goals, risk tolerance and overall personal financial situation may have changed over the last year. This also could be a good time to take some profits and re-balance your investment portfolio.

3. Evaluate where are you relative to your financial goals that you had set and re-examine your life goals and priorities.

4. Review your income and expenses and decide if you need to make any changes. Are there new expenses that you must plan for, that are not currently in your budget? It is important to have a clear picture of where your money is going. This step will help you prioritise your finances and reach your goals.

5. Plan to reduce your debt. Set a plan to consistently make significant payments to your debt obligation. Paying down high interest debt is better than any investment.

6. Take a look at your Emergency Fund. It should have 6-9 months of savings set aside in liquid assets like Fixed Deposit or Liquid Funds for emergencies like job loss etc.

7. Calculate your Net Worth. Net worth is defined as total assets minus total liabilities. Tracking this will allow you to know whether or not you are building real wealth.

8. Review your Insurance cover. Having the right insurance in place is a critical part of a financial plan.

9. Get your financial paperwork in order and get rid of the unnecessary documents, papers which are causing clutter.

10. Plan to boost your financial literacy this year. Plan to read books, magazines, talk to financial professionals, and educate yourself.

I do not know what the upcoming year will bring us; nobody does! Future returns, interest rates and inflation rates are not known to anybody. But there is one thing that I know for sure, that all those who have a financial plan in place based on their life goals will be much better off than those who do not have one. I will continue to focus on things that I can control, which is control my expenses, savings, investments and stay focused on my long term goals.

As 2021 draws close, I would like to convey my best wishes to all my readers for health, happiness and financial success in the New Year 2022!

Thank you so much for your readership, your trust, and your time.

Happy New Year!

Regards,

Saikat

(Image by Tumisu from Pixabay)