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Shruti Arora

I am a CERTIFIED FINANCIAL PLANNER & have worked at Banking and Non-banking Financial Companies.

Debunked #3: You Should Invest According To Your Age

In this post am going to debunk the myth that “age plays a central role in investment allocation”.

You must have heard the rule of thumb: “Your allocation in bonds should equal your age” or “Your equities allocation should equal 100 minus your age.”

Following the above rule of thumb without taking other parameters into consideration will be dead wrong. This simple advice can cause a lot of problems which will not be as simple to fix. The notion that investment is related to or linked to your age, is too generic to be useful for most investors.

“It’s not what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.”

The basic theory behind this advice is based on what might be called the life-cycle theory of investing. It is believed that everyone goes through similar and predictable stages in their financial lives. Accumulating more assets instead of saving in early years, saving more in most productive (high earning) years of middle age, and finally spending their savings during retirement.

Do you see the problem with this theory? This theory assumes two things- first that each and every individual of a certain age acts in a similar way, & second that age is a good indicator of your risk profile. Nothing can be far from truth than the above assumptions. Read More

7 Good Money Habits You Should Adopt

Good habits are the key to success and it’s true for your money too.

The power of a good habit can work wonders, you can easily attain financial freedom by positively channeling how you treat your money.

Forming good money habits is actually quite simple, it just takes a few small actions and changes and you are on the path of success. Discipline and deliberate actions will help you develop good money habits which will improve your financial life.

Let us find out what these smart money habits are: Read More

What Is Your Risk Appetite?

In earlier posts, I have mentioned time & again that one of the main factors on which your investment decision should be based upon is your risk profile. In this post I will help you understand how you can determine your risk appetite.

Investing is managing and improving your personal finances. Since it’s personal finance we are talking about here, understanding yourself and your situation will help you invest your money in a manner that works best for you.

Before you start searching for the best investment options, it’s important to understand your own risk profile otherwise you might jeopardize your goals.

This means that understanding your risk appetite is an important step, without which you might find yourself over or under exposed to risk. If you are not comfortable with the risk level of your investment you will keep acting impulsively and fail to achieve your goals. Read More

How To Invest In a Bull Market

The term bull market is derived from the way the animal attacks its enemy. A bull would mainly use a forward, upward motion to thrust its horns against its target; the same motion the market prices move during this type of market phase.

Sensex and Nifty are reaching new highs. This means that we are currently in a bull market phase. Bull market is a timespan when there are extended periods of stock market gains.

Surely, a bull market can only  be a great thing for an investor, right? This is the time when rallies become routine and one earns high returns on investment. But the only catch is that the investor should know what to do in this situation.

Below are some things one needs to keep in mind if they want to make most of the bull market. Read More

The Mistaken Allure of Index Funds

Index funds are the norm and the “thing” in the US for quite some time now. They are  considered the best and easiest form of investment.

But fortunately or unfortunately India is a different ball game all together. This means that the much loved index funds are not the best investment strategy for Indians, at least for the foreseeable future. Let’s understand why.

What are Index Funds?

Index Funds are a passive form of investing. Index fund’s main objective is to generate return in-line with its benchmark. They are basically a no-brainer fund, as they just mimic the benchmark portfolio.

For example, a fund tracking the Nifty 50 Index will buy the same 50 stocks and in the same proportion as represented in the Nifty Index. Also, in case of any changes like replacement of one stock with another in Nifty 50, the index fund will undergo the same changes. Read More

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