Authored by Amarjeet Maurya
Surely, 2021 is a year that everyone waits with hope, curiosity, and anticipation. With multiple vaccine candidates in their last legs of development, perhaps, the year will finally help us break through the shackles of face masks, social distancing, and everything else that has left us with the anxiety of late! In other words, it will be a year of freedom wherein we appreciate, cherish, and enjoy those aspects of life that we earlier paid little heed to.
The year 2021 also gives us the perfect opportunity to start afresh with a new beginning and achieve our long-desired financial freedom.
So, if you’re looking for ideas, here are some of the New Year resolutions that you must consider:
I will start investing
The year 2020 has given us the perfect glimpse of why we should always have a financial buffer. It not only secures us and our family for any unforeseen need, but it also unlocks avenues for superior wealth creation. This way, we can invest in a market opportunity as and when it emerges.
For instance, benchmark indices have grown by 80 percent from their lows in March. They are about 13 percent up from where they were at the beginning of the year. Several stocks across segments including IT and Pharma have grown multifold during this period. The more you invest and keep on investing, the more your accumulated wealth will grow whenever relevant market opportunities arrive.
I will channelize my spends
Just because you’re starting to invest doesn’t mean that you need to spend any lesser. In the words of the great Roman playwright Plautus, “You must spend money to make more money”. What our dear friend meant was that you have to channelize your spending such that they generate wealth for you. So, maybe you can give that burger a pass and rather begin a SIP or buy a stock. By doing so, you will also be ensuring your physical fitness along with a financial one.
I will increase my financial knowledge
Uninformed investors are likely to make subpar profits and incur losses. Don’t make that mistake. Even if you are buying anything as per the recommendation of an advisor, an investment engine, or a small case, make sure you learn about all intricacies of the instrument that you’re about to buy. It will ensure your returns are always optimal. Doing so will also enable you to make quick and better decisions while eliminating the stroke of luck from the equation.
I will diversify my investment
Though it seems to be a nice idea to keep the investments simple, seasoned investors will tell you never to keep all of your eggs in one basket. If you’ve invested in stocks, make sure you diversify throughout the sector (including high-potential large-cap and small-cap companies). Also, balance it off by giving a certain weightage to gold or silver. A diversified portfolio directly decreases the risk concentration and hence, your overall risk exposure.
I will learn to code
Do you know? Today, more than one-third of all trades executed in India are algorithmic trades. Algorithmic trading, popularly known as algo trading, is the virtual modeling of trading strategy to automate the buying and selling of securities. And, it’s not rocket science either. You simply have to write a code and feed your call to action in the algorithm. Certain digital brokers even empower you to create advanced charts using historic and real-time data, which can be used to determine such calls to action. The best bit is that you get premium rates while trading in this approach as compared to manual buying and selling.
In developed economies, the algo trades comprise as high as 80% of the overall market volume. The figure is still expected to grow given the increasing tech intervention in trading and investment. In India, you can perhaps stay ahead of the curve by learning a language such as Python, R, or Java alongside others and enter the ripe market of algo trading – which will surely dominate a majority of trades in the future.
With 2021 just around the corner, it’s high time to do all that you have long wished for including your financial freedom. Make sure you keep these New Year resolutions on priority in order to truly achieve a new beginning of financial freedom. Godspeed!
Amarjeet Maurya is AVP – Mid Caps at Angel Broking Ltd. Views are personal