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Here are 4 key essentials for mothers to keep in mind while investing

While growing up, we all knew that 'mother knows best'. We have all learnt so many things from our mothers and continue to lean on her even after we start our earnings journey. My first lesson on savings definitely came from my mother who never let a good opportunity to teach about the importance of saving and building a safety net pass by. The best way that you can honour your mother and become a role model to your children is by following good financial planning. When you save and invest your money judiciously, you create a safety net for yourselves and your family. Further, you also take yourself one step closer to reaching your financial goals.

Here are a few things to keep in mind when you start your financial planning and investing journey.

1) Risk mitigation is everything: Most people tend to invest in the wrong asset classes simply because of the 'risk factor'. There are two things to consider here. One, is your own risk profile. This is further broken down into your ability and willingness to take risk. Your ability to take risk depends upon your income, liabilities, and stability of cash flows. Your willingness to take risk depends upon how comfortable you personally are with taking risk. Together, these will determine whether you are absolutely risk averse, have an average risk profile, or can take higher levels of risk. The second factor is to know the risk in the investment. Generally, debt investments are considered to be low risk while equity investments are considered to be higher risk.

2) Clearly define your goals: Do not invest in silos. Instead, make a list of all your goals and even your liabilities to identify why you need money and assess how much money you might need. Do you need to save money to fund your child's education? Have you kept aside some money as an emergency fund? Have you purchased a health insurance policy for which you need to pay an annual premium? Understanding your needs is really the first step towards astute investing. You cannot hope to make good investments if you don’t know why you are investing.

3) Do not put all your eggs in one basket: The good thing is that risk can be managed very well simply by diversifying your investments. This means that you should not put all your money in a single investment or asset class. This way, you face a different kind of risk. Either you can face extreme loss if that one investment does not do well or you might end up taking very low risk and not meet any of your financial goals because the single investment does not generate enough returns. Thus, you must invest in a mix of investments like equity, debt, and even gold, to ensure that your investment portfolio grows while it also remains protected.

4) Don't be afraid to hold the reins: Investing can sometimes feel like a complicated discipline. Perhaps it is not as simple as starting a fixed deposit. However, with just a little bit of planning and understanding, you can definitely start your investing journey. Further, you can also seek the help of a financial advisor who can understand your specific requirements and accordingly guide you on this journey.

Mom always said that the best time to start something is 'NOW'. So don't wait. Invest in your future and in the future of your family.

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