FINANCE SPECIAL....... Where investors go wrong

Where investors go wrong  Some common mistakes that people make while setting their financial goals.     Everyone has goals, but not everybody manages to achieve them. Lack of money isn’t the only problem, since people with relatively high incomes also struggle to meet them. Here are the common reasons that investors miss their targets and how you can avoid doing so. Keeping the bar too high or too low Crash diets never work. Similarly, a goal that imposes frugality on the investor is bound to fail. It’s good to be ambitious, but don’t set your goals so high that you are forced to sacrifice too much of your present for the future. On the flip side, don’t keep the bar very low. Many investors believe that only their retiral benefits can take care of all their retirement needs. Letting emotions cloud decisions Buying a home is a crucial decision, but is often clouded by emotions. Young people take big home loans that gobble up a disproportionately large chunks of their income. They are also guided by friends’ and peers’ purchases, and parents’ suggestions. Your situation is unique, so don’t set goals on the basis of what others are doing. Keeping the goals vague Unless you write down your goals and assign a value to them, you will not achieve much success. It is not enough to resolve, ‘I will save for buying a new car’. Make it more specific: ‘I will save 1 lakh for the down payment of a car’. Follow this up with the plan: ‘I will save 8,000 a month for the down payment of a new car in 12 months’. By fixing a number and deadline, you make the goal measurable and achievable. Not taking a holistic view Every saving, investing and spending decision has an impact on your overall situation. The planning can come to a nought if you make random investments and incur unplanned expenses. Take a holistic view instead of looking at goals in isolation. Investing and forgetting Setting goals is not enough; you also need to track them. Review the performance and check whether your investments are on track. The market conditions might create situations where you are not able to achieve your goals by the intended date. Tracking helps you make a course correction, if required. Nitin Vyakaranam  founder and CEO of Arthayantra.com.

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