Entries by dilshad321

What is the difference between your needs and your goals? Why should one plan their investment according to goals?

Difference between your needs and goals

The needs refer to an individual’s basic requirements that must be fulfilled, in order to survive. By this, we mean those requirements which are extremely necessary for a human being to live a healthy life. They are personal, psychological, cultural, social, financial that are important for a person to survive.

In ancient times, the three basic needs of the man were food, clothing and shelter, but with the passage of time, education and healthcare also became integral, as they improve the quality of life. These are a person’s priority as these are the things that keep us healthy and safe. Therefore, if needs are not satisfied in time, it may result in illness, inability in functioning properly or even death.

What are the factors that influence an investors goal

Risk appetite refers to how comfortable an investor would be when the value of his investment decline significantly. Higher risk investments also have the potential for higher returns, while lower risk investments are more conservative and usually have lower returns. An investor with a higher risk tolerance is willing to take the chance of losing money for the possibility of a superior return on investment.

Common Investor Biases

The concept of behavioural finance helps us recognize our natural biases that lead us to making illogical and often irrational decisions when it comes to investments and finances. A prime example of this is the concept of prospect theory, which is the idea that as humans, our emotional response to perceived losses is different than to that of perceived gains. According to prospect theory, losses for an investor feel twice as painful as gains feel good. Some investors worry more about the marginal percentage change in their wealth than they do about the amount of their wealth. This thought process is backwards and can cause investors to fixate on the wrong issues.  

How do I know if i have made a Comprehensive Will

Beneficiaries – Does your will mention all the beneficiaries of your estate? You have to clearly write down who will inherit the assets you leave behind and their personal information such as name, age, address and phone number so that there is no ambiguity.
Guardians – If you have dependents, it is important to write down who will their guardians be when you are not around. Minor children cannot get involved in business transactions. The guardian can act as the caretaker for the assets till your children become adults. You have to think carefully before selecting a guardian and take a decision in the best interests of your dependents. It is better to list down at least two guardians.

The Automatic Millionaire – Book Review

We should learn to budget. In the budget, we should first allocate a sum to ourselves and invest this amount. It need not be a big sum. He says “The first hour of every day that you work should be going to you.” Calculate your pay for one hour per day and keep that money aside for yourself to invest. This way, you do not require a huge amount of money. Additionally, as your income grows, you will pay yourself more which means you will invest more.

Artificial Intelligence in Investing

For investors
Risk Mitigation: With the AI enabled services, the investors will be able to visualise and control real-time, the active risks embedded in a portfolio, as well as access suggestions to mitigate unwanted exposures, all without the need for a PhD in Maths. Investors will now be able to easily target and monitor the specific risks they know something about and intend to profit from (e.g. a turnaround at a manufacturing firm), without unknowingly over-exposing their portfolio to sources of uncertainty they know nothing about (e.g. the result of an election or future levels of interbank lending rates). The key benefit of such risk control and transparency is better returns and more learning.

You would have created assets over a period of time. Your family is financially dependent on you. It is vital to ascertain how the family is financially protected and how the assets are distributed once you are no more. If you do not have an estate plan in place, the court will make decisions which may or may not be in your or your family’s best interests.