Some Automation Strategies That Can Do Wonders to Your Financial Planning

Why should debt funds still be the integral part of your portfolio
Why should debt funds still be the integral part of your portfolio
April 21, 2023
The Power of Now in Your Financial Planning
The Power of Now in Your Financial Planning
April 25, 2023

Investment decisions could be stressful. More so if you have to keep making them on a continuous basis. I observe many investors who start enthusiastically and back their ongoing investment decisions to a certain fundamental plank- ” I study the Indian economy, world economy, geopolitical situations etc hence I have a good idea about how the market functions” they may claim.

But very soon their enthusiasm converts into fatigue and slowly they find it hard and hard to do the continuous calculations of investment decisions.

Making investment is a habit and like every habit it prospers when it lodges into your subconscious mind. Then you don’t have to scratch your head again and again in order to make investment calls. And when you set up such a system of investments, you end up doing good investments regularly and reap the massive advantage of compounding later.

Here are few automation strategies to maximise your  investment advantages-

Automation in investments- I consider the facility of SIP through auto debit a boon for small investors. This small yet very significant invention has created countless crorepatis. I remember the days of writing 12 cheques every year for SIPs in early 2000. It was an arduous task and continuation of this was taxing for investors and advisors alike. Now with the auto debit facility, developing the discipline of investments has become so much easier and effective.

If you have not taken SIPs so far then I should consider this a great failure on the part of advisors like me who could not articulate its benefit effectively. Auto debit SIPs are one of the best forms of automation. Do it immediately to benefit this wonderful wealth creation system.

Automation in fund selection- With more than 10,000 funds already and many more keep coming up, selection of funds seems like a herculean task. Here your advisor would do the automation task for you. She/he will take the representative funds of different categories and design a well-diversified portfolio for you. One more way is to select the index funds which takes away all the biases in fund selection.

Automation in asset allocation- Taking asset allocation decisions in advance proves to be very potent in financial planning. If you design the future road map of asset allocation for your financial goals, then decision making becomes relatively easy. In the absence of a game plan, asset allocation decisions get difficult & complicated because prevailing market conditions and ongoing media noises impact your decisions.

Non-automation in expenses-While the automation works to make your behaviour easy, we need to make our non-essential expenses a little more difficult. The idea should be to create an additional level of complexity so that these outlays find the going more and more difficult. One of the most effective ways is to use “Cash” in cases of superfluous spending. The arduousness of taking out cash and then feeling the “Pain of Payment” will make these expenses more judicious.

Manoj Pandey