Unlocking financial freedom this Republic Day: 5 Things to know before embarking on financial journey

India celebrates 73rd Republic Day on Wednesday, January 26. The Indian Constitution came into effect on January 26, 1950, three years later after Indian attained freedom from the British Raj in 1947. As the country gears up to celebrate the 73rd Republic Day and India being a nation brimming with new investing trends, this can be an opportunity to give shape to your financial plans. Puneet Maheshwari, Director, Upstox, on this occasion, helps you understand the steps as an investor you need to take before embarking on financial journey.  

Upstox Director says Planning finances efficiently isn't just about investing one’s money in various places but also to understand investment approaches before one starts on their investment journey. As investors look for ways to channel their funds to get optimal returns, be it an added source of income or a long-term investment plan, Puneet advises you to consider following points before putting your money in a plan:  

1. Financial roadmap: It is important to be aware of exactly what one desires to get from one's investments. Investors should start with monitoring their savings and expenditure patterns, and draw out a budget to determine the amount of money they can afford to invest. Accordingly, one should devise their short/long-term financial goals. This will help set an achievable target for their investment journey.

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2. Risk appetite: Understanding the threshold for risk is as crucial as determining a financial goal. It acts as a foundation for a strong journey ahead. Once investors are aware of their risk tolerance, it can help filter the most viable investment options that are worth their money. Not recognising one’s own risk appetite may lead to blurred financial choices.  

3. Diversification of assets: Each asset class performs in its own unique manner in different circumstances. Market conditions may be such that a particular asset may perform exceedingly well, while the other may not give great returns. Having a diverse portfolio ensures that investors have a comparatively smoother journey and are not jolted by the poor performance of a particular asset.

4. Review investment plans regularly: When investors first chalk out a plan, their decisions are impacted by certain circumstances and market conditions. However, as time passes, the financial environment might change. Investors must keep reviewing their plans at regular intervals and alter them as and when needed. Creating plans that are open to change can help investors stay on track and reap maximum benefit from their investment.

5. Know your rights as an investor: Even though shareholders own a portion of the company they have no say in its day-to-day operations; however, they have certain rights. Companies are required to obtain shareholder approval on a variety of issues. Whether it is approving mergers and acquisitions, appointment of directors on the company board, or changing auditors, investors have a say in the outcome. At the AGM, investors can ask questions to the management and voice their opinions. The law requires companies to send copies of their annual reports and give notice of shareholder meetings with the agenda in a timely manner.