Secret 2 of Squirrel’s Corner – guidelines to make your investment life easier, more rewarding and a bit more fun.
This month’s mantra is Manage.
To which some of you may well reply, ‘Duh. Isn’t that obvious?’ Well, yes it is, but we see so many people not taking the time and the trouble to manage. We hear constant refrains of, “We don’t understand finance,” or, “We are terrible at this.”
Here’s another secret. None of this is rocket science. When we say ‘Manage’ we’re talking about simple stuff, common sense stuff.
Keep records of your bank balances, the investments you make, the shares you hold. If you don’t like computers, get a notebook and write everything down – folio numbers, account numbers, names the investments are held in, if the investments are for defined periods (e.g., fixed deposits) then the dates that they mature and need to be renewed, and so on. The more detail, the better. And then keep the notebook updated and keep it safe. Let someone responsible in the family know where it is.
Make time for management
Set aside time to think about these things. Don’t let life just happen to you. Plan your expenses. Include things you should be spending money on apart from the essentials of life – for example, money to entertain yourself, take in a movie or a play, travel, gifts for your children or grandchildren. Then figure out how much income you get, how much money comes in, whether it comes in monthly or otherwise during the year. Then see how you can allocate that money, first to essentials (like food and electricity), then to the other stuff using whatever priorities you think are important. Then keep aside funds for an emergency or contingencies. And continue to save whatever you can, whenever you can.
Manage your investments
Sounds complex, but all we really mean is, Think About Them. Don’t invest and then forget about them. Look at them periodically – at least once a year, preferably once a quarter; definitely NOT daily. Investments are like fine wine: they need time to mature and usually get better with age. But if you store the wine wrongly or don’t look after it, it turns to vinegar. So, make the time to see if your investments are giving you the returns they should, but don’t obsess over them. Ensure your paperwork is up to date: address, phone number, email, bank details, these should all be correctly recorded by the institution your money is entrusted to. If there have been changes ensure updates happen wherever needed. Ensure you get periodic statements and ensure these statements accurately reflect the transactions you did and the balance you hold. It can be tiresome, but it’s essential.
This one’s a biggie, but it’s inevitable and inescapable. Plenty of people who didn’t grow up with computers and smart phones are uncomfortable around technology. Some don’t like to use ATMs or they get frazzled by SMSes or don’t have easy access to computers to check their email.
Unfortunately for them, the world is changing and short of an apocalypse, technology is not only here to stay, but its role in our lives is only going to increase. Embrace it as much as you can. While technology is a double-edged sword, by and large, it makes life safer and simpler.
If you do have access to email, then adopt it as much as you can – get your bank and mutual fund statements sent to you by email – saves you the bother and space of having to file physical pieces of paper. Almost everyone has access to a cellphone – sign up for your bank to send you an SMS if there’s activity in your account – it’s a great check on what’s happening to your money.
Be sensible about using technology though – don’t ever give your password to anyone. And that means anyone.
Make up your mind to get comfortable with technology. As you get more comfortable, use it more until you start getting uncomfortable.
Manage your life.