World Financial Planning Day 2023: It’s World Financial Planning Day today, October 4. The International Organisation of Securities Commissions (IOSCO) is behind this project. The goal of World Financial Planning Day is to increase public awareness of the value of financial planning. Along with awareness, everyone should strive to achieve financial independence.
Here are some investing advice on World Financial Planning Day 2023
Increasing the portfolio’s diversity
The fundamental idea behind portfolio diversification is that different asset classes behave differently under various market scenarios. Building a portfolio with a variety of diverse asset types, including cash, stock, debt, alternative investments, and commodities, is required. Investors may be able to reduce the effect of any single investment’s subpar performance on the whole portfolio at any given time by spreading their investments over a variety of assets.
Balancing the proportion of your debt and equity
Investors should hold 60% of their assets in equities and 40% in debts, or a 60:40 portfolio. Investors should first consider their capacity and risk tolerance. Long-term, or in around 7–10 years, equity assets will contribute to increasing the value of their investment, whereas debt assets will offer financial security during erratic market conditions.
50-30-20 Budget rule
According to this personal finance principle, people should divide their income into three groups. Spending should be divided into three categories: needs (50%) wants (30%) and savings (20%).
Increasing monthly investments as income rises
In order to become a crorepati, one needs grow one’s Mutual Funds SIP annually. Experts advise using SIP in steps. An automatic increase in the SIP amount by a certain percentage is known as a step-up SIP. For instance, this year, a SIP of 10,000 was made. In the event of a 10% step-up, the SIP amount for the next year would rise to Rs. 11,000 (10% of Rs. 10,000 equals Rs. 1000).
Adjusting Portfolio as we age
After 10 years, according to personal finance experts, investors should increase their debt exposure by 5%. Simply put, when we are young, we have a great capacity for risk-taking. We should expose ourselves to more debt instruments as we age.
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