10 Financial Freedom Commandments to Embrace this Independence Day

As India approaches its 77th Independence Day on August 15, 2023, the spirit of freedom resonates within us. This auspicious occasion not only commemorates our nation’s freedom but also inspires us to reflect on a different form of independence, a crucial one that enables personal liberation—Financial Independence.

Financial independence is the stepping stone to a life where dreams are pursued, adventures are experienced, and the well-being of loved ones is ensured. It provides an enduring sense of peace, reduces stress and creates a safety net for future uncertainties.

As we mark our nation’s 77th year of independence, let’s take a moment to reflect on the road to our financial independence. Here are 10 commandments to guide you on this financial freedom journey:

• Set Clear Financial Goals: The first commandment to financial freedom is setting a tangible financial goal and devising a strategy to accomplish them. This helps you decide the amount you would require in future and the timeline needed to achieve them. The goals could be planning for your retirement, children’s education, or any other long-term commitments. Having a clear roadmap for your financial journey is essential.
• Start Early: Harness the power of compounding by investing as early as possible. The longer you remain invested, the chances of growing your wealth increase. This emphasises the significance of initiating your investment journey as soon as possible.
• Embrace Financial Prudence: The essence of financial independence lies in living below your means. Abstain from extravagant spending, concentrating instead on saving and investing some of your earnings. Consistent saving creates a surplus that can be invested, propelling you closer to your financial independence goals.
• Diversify Your Investments: Distribute your investments across varied asset classes and industries to mitigate risk. Diversification safeguards your portfolio against market volatility and enhances the probability of long-term returns. This is where mutual funds excel, enabling you to invest in diverse assets and minimise risk.
• Embrace the Long-term Approach: Investing is a marathon, not a sprint. Resist the urge to time the market and maintain a long-term perspective instead. Don’t let short-term market volatility shake your long-term investment strategy.
• Stay Educated and Informed: Arm yourself with knowledge. Keep up-to-date with financial news, economic trends, and investment strategies. Constantly learn, adapt, and refine your investment approach to make informed decisions.
• Mutual Fund SIPs – Companions in Your Financial Journey: Systematic Investment Plans (SIPs) are ideal vehicles for long-term investment. By investing a fixed sum at regular intervals, SIPs nullify the impact of market volatility and optimise returns over the long run, making them an essential part of your financial plan.
• Revise Your Financial Plan Periodically: As your life circumstances and financial objectives evolve, so should your investment plan. Regular reassessments and adjustments of your financial strategy are crucial to stay on track with your financial independence goals.
• Manage Your Emotions: Avoid impulsive investment decisions driven by fear or greed. Exercise discipline and rationality in managing your investments, focusing on long-term financial aspirations rather than short-term market movements.
• Seek Professional Advice if Needed: If managing your investments seems daunting, consider seeking advice from a financial advisor. Their expert perspective, tailored to your financial situation and goals, can offer valuable insights and strategies. They can provide personalised advice tailored to your unique financial circumstances and goals.

This Independence Day, let’s plan for our financial independence. Let’s strive to achieve our goals, enjoy a fulfilling life, and contribute to the growth and prosperity of our nation during this ‘Amrit Kaal’. Embrace these 10 commandments and take the reins of your financial future into your own hands.

K S Rao, Head - Investor Education & Distribution Development, Aditya Birla Sun Life Asset Management Company Ltd

Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.