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  • Kargil Vijay Diwas: How to attain financial freedom

    Publish Date: 26th July, 2018

    Decades ago, they fought valiantly near the Border for national security. Years later, you continue to fight--no, not for national security, but for the security of your own and family's future. It's a constant tug of war for financial freedom.

    Funnily, not many realise that financial freedom is not about money, but the other way around. It's where you don’t have to think about money! It's the freedom to be who you want to be and do things that you really desire.

    If you wish to attain a state of financial freedom for yourself and your family in the next 10 or 15 years, then you need to invest a degree of time and effort, stay abreast with the economic scenario, understand basics of portfolio management and have a clear and disciplined approach towards your financial goals to get the best bang for your buck.

    ALSO READ: Types of financial planning

    Here are some pointers to keep in mind that will help you build a robust army of a portfolio:

    Diversify for wealth protection

    You need to make long-term strategic investments across diverse segments. These investments need to balance risk propensity, duration of investment, and the sector of investment. A right mixture of investments can be very helpful in times of economic volatility.

    ALSO READ: Guide to Investing

    Build upon a strong cavalry of fundamentals

    Do not get carried away by the lucrative price or hearsay surrounding a stock. Do your own due diligence. Rake up past reports and data available online to understand the nature of the business, the profile of its promoters, and the background of the key executives on the board. Study the nature of the business, its relevance and its growth prospects over the long term and its standing vis-à-vis competition.

    Take a sniper’s look at the stock valuation

    To determine whether a stock is a good long-term buy, evaluate its past earnings and future earnings projections. The price to earnings ratio (PE) will help comprehend its value potential, while dividend consistency shows its earning predictability. Evaluating the current ratio and operating cash flow with respect to the net income helps to understand the liquidity position.

    Make surgically systematic investments

    Trying to time the market is an exercise in futility. It is best to average your cost out by making regular purchases. Understanding the basics of candlestick charts is a good way to track the performance of a stock. You could reasonably predict the buying/ selling level at various price points.

    Keep a radar on economic indicators

    Tracking policy and regulatory implications are important if you have a significant portion of your investment riding on the stock exchange. The major stock market averages are considered to be forward-looking economic indicators and will reflect changes long before most mainstream media start identifying any movement.

    Consider subscribing to a pink paper and make it a point to stay abreast with economic gauges, so you can take a call to hold or make suitable calls for your portfolio health.

    Long-term value investing requires patience and discipline. Your investments don’t run on auto-pilot. Just as military prowess is not built in a day, your investments will always require a sharp insight and a tactical approach. So, open your trading account with Kotak Securities today and build a better and stable financial future.

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