Taking stock

Picture an old-school person like your grandfather. Try and reminisce how he dealt with money. The money would be kept in a steel Safe-locker and he always knew exactly how much money he had in it. In the good Old days, bank deposits were the only investments for the middle class. The bank deposits would all be tabulated neatly in the order of their renewal dates. Monitoring would be perfect. Everything worked like clockwork and money would be in a very orderly way. Discipline and caution were the buzz words and things were always kept simple in the way they handled money.

Contrast this with how money is handled in the present. We invest in several products like Stocks, Mutual funds, ULIP’s, and bonds besides the traditional bank deposits. On the one hand, we invest in several options for the purpose of saving on taxes. On the other hand, we borrow to spend on credit cards. We even buy homes with home loans so that we can save on taxes. Clearly, the way in which we deal with money is far more complicated than they were in the good old days. When we borrow and lend at the same time, we need to balance our finances and constantly keep watch so that they are within limits.

With so many product options and multiple financial goals like life insurance, health insurance, tax savings, home buys, and equity investments we have clearly complicated our handling of money. As different times call for different approaches, we are left with limited options but to create a wider basket of financial products. That has given rise to a portfolio. Your portfolio includes all the financial products you have bought and maintain on a running basis.

But, do we really know what we own and manage our portfolio in a methodical way? In the race for time and against it, we hardly find the time to devote to financial matters. We mostly rush to fulfill specific needs at the last hour and forget about them after that. More importantly, we do not have the big picture nor do we routinely tabulate, monitor, or review our money matters. The portfolio itself is only in our memory and hardly organized and tabulated. This clearly leads to lapses, oversight, and loss of opportunity.

This is where the old school approach of Taking Stock will make a big difference in the way we handle money. If you have a way of arranging your finances, you are actually preparing yourself for bigger things. Wealth creation happens only when we arrange, manage, and take stock of our finances periodically. Taking stock of your wealth gives you a deeper understanding of what assets you need to own, how you need to grow your money, and also the risks you are taking to achieve your financial goals.

Today, most of us are simply letting things be. We are hoping for some random decision to work miracles for us. Miracles with money are a rarity. The richest investors are the most systematic people. They constantly take stock of their decisions and finances and tailor them to achieve their goals. While each of us has our own finances and make our own decisions, we should start taking stock regularly. Start tabulating your portfolio and take stock of it regularly. Wealth will soon follow.

Happy investing!

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