Vighnas in Your Financial Plan

AI Generated Image

Every year, when Ganpati Bappa arrives in our homes, we welcome him as the Vighnaharta - the remover of obstacles. We pray for wisdom, prosperity, good health and the strength to overcome difficulties.

The same thought can guide us in our financial lives too. A strong financial plan is not just about earning more or finding the best investment. It is equally about recognising and removing the vighnas that quietly come in the way of financial progress.

Debt - The Heaviest Obstacle

One of the biggest financial vighnas is unnecessary debt. Credit card dues and high-interest personal loans can quietly consume a significant part of our income. Every large EMI reduces the money available for saving and investing.

Like carrying excess baggage on a journey, debt can slow down wealth creation. The priority should be to repay high-interest borrowings first, particularly loans carrying interest rates of 10% per annum or more. Lower-cost loans may not necessarily need to be repaid aggressively.

This is why a well-planned home loan, for example, need not always be viewed in the same way as expensive personal or credit-card debt.

Lack of Insurance - A Silent Risk

Life is unpredictable. A major medical emergency or the untimely loss of an earning member can wipe out years of carefully accumulated savings.

Adequate health and life insurance therefore form an important foundation of any financial plan. Health insurance protects savings from large medical expenses, while term life insurance helps protect the family's lifestyle, responsibilities, dreams and financial goals.

Protection should come before wealth creation.

Absence of an Emergency Fund

Even a sound investment portfolio can be disturbed by an unexpected expense.

A job loss, urgent home repair, family emergency or sudden medical requirement can force us to borrow money or redeem long-term investments at the wrong time.

Keeping around 6 to 12 months of essential expenses aside as an emergency fund provides stability when unexpected storms arrive.

No Clarity of Goals

Ganesh Utsav is celebrated with devotion, discipline and purpose. Our investments also need a purpose.

Buying a home or car, taking vacations, educating children, planning for their marriage, building a retirement corpus or simply creating long-term wealth - each goal requires planning.

When goals are clearly identified, investment decisions become more disciplined. Without them, money can remain directionless and short-term distractions can become long-term vighnas.

For long-term goals, an appropriate allocation towards growth-oriented assets such as stocks, equity and hybrid mutual funds, along with gold, can play an important role in wealth creation. The key is proper asset allocation based on the goal, time horizon and risk profile.

To Conclude

This Ganesh Utsav, while we pray to Vighnaharta to remove obstacles from our lives, let us also identify the vighnas in our financial plans.

Reducing unnecessary debt, protecting the family through insurance, maintaining an emergency fund, and investing towards clear goals with proper asset allocation can make the financial journey far smoother.

May Bappa bless us with the wisdom to remove these obstacles and build lasting prosperity.

Ganpati Bappa Morya!

(The author is a Chartered Accountant and CFA (USA). Financial Advisor. Views personal. He could be reached on 9833133605.)