Diwali; the festival of lights is observed by members of the Hindu, Sikh and Jain faiths and coincides with the Hindu New Year. The festival is a celebration of new beginnings and the triumph of good over evil.
There is no better time to bring light to your savings that are sitting in the dark and to put them to work for you. The new year is an auspicious time to set new financial goals, so you can truly unlock the potential of what your wealth can do for you.
This festive season is also a good time to take up the cleaning of your home, so it only makes sense to carry out a similar activity for your financial assets such as bank accounts, mutual funds, and insurance policies that are probably charging you more in fees than any returns you are seeing.
However, a lot of us have our savings tied up in other assets; so here’s a quick guide to take charge of this so your money can do better.
Bank accounts that are not being used for a long time should be closed as they are designated as dormant and are prime targets for penalties and unnecessary fees. Any balance should first be transferred to an active account, where they can eventually be transferred to a low-cost investment account that is earning you some money. It is then advisable to contact your bank and follow the steps to close your account by filling required forms, returning checkbooks and ATM cards.
Investors can get a consolidated view of their holdings across mutual funds by contacting their financial institution. It is also usually sent on a monthly or semi-annual basis. It is best advised to examine the fees and performance of your investments and compare it to cheaper and less risky investment options available in the region. Do not always believe dapper bankers who claim they can outperform the market and are working in your best interests, because more often than not they aren’t. Evidence has shown that passively investing in index funds that track entire markets outperform actively picking stocks. Look no further than the famous bet that billionaire and investing guru Warren Buffet had with a hedge fund.
Many institutions who claim to have some secret sauce and can time the market offer lucrative Mutual Funds. These usually come with minimum lock-in periods, withdrawal fees, and required monthly contributions which can end up tying you down rather than giving you the financial freedom you deserve. It is highly recommended you choose alternative options such as online investment robo-advisors that focus on Exchange Traded Funds (ETF’s). Focused on transparency and low fees, they are challenging the status-quo that institutions in the region have been taking advantage of for many years.
On Dhanteras, which marks the first day of Diwali, it’s considered an auspicious day to invest in precious metals like Gold. It is a popular way for many to put their savings into a tangible, dependable, and often aesthetically pleasing asset. It’s definitely a great option as it falls in line with tradition, while still providing a good level of security to your hard-earned savings. However, financial experts recommend that gold should not exceed 2-5% of your investment portfolio. Therefore, it would be sensible to consider putting a small chunk of those earnings into low-cost investment portfolios of varying risk levels comprised of exchange-traded funds (ETFs) that would expose you to a diverse range of equities and bonds across global markets. That way you are not just lowering your risk of investing in one precious asset but rather spreading your risk over a plethora of assets that are still giving you returns.
A new year is also a great time to make wiser choices, and nothing is wiser than investing your wealth. Sarwa is spearheading the robo-advisory movement in the Middle East by making investing accessible and affordable to the masses. You could be well on your way on this financial journey in just minutes by doing a quick survey, taking a selfie and providing some identity proof. A short process will give you access to low-risk globally diversified portfolios of equities, real estate, and bonds.
This Diwali; be an efficient investor by putting your wealth into effective investments, which are made after analyzing your goals, keeping in mind the tenure and risk capacity besides other factors that contribute to prudent financial planning. A well-diversified and planned investment would be your bet as it would help you reap better returns while effectively maintaining the risks associated with them.
The Sarwa team wishes you a joyous and prosperous Diwali!
This festive season don’t let your savings sit in the dark, and bring light to your money with Sarwa. Build your wealth and reach your financial goals faster by investing in globally diversified low-cost portfolios tailored to meet your goals.
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