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Investor Alert :
Habits of a financially successful people
14 Nov 2015 | 10:00AM
The aim of every individual is to be financially successful. More than a secret strategy or investing tips, you need to streamline your behavioral and emotional patterns to secure your financial future. Below are few habits of a financially successful people that can help you build or alter your habits to get into the right track with your financial decisions.

They make a plan: 
Making a budget, sticking to it and framing goals are the essential components of formulating a plan. By failing to prepare, you are preparing to fail, said Benjamin Franklin. Planning is clearly the unstated commonality among winners and the first step to formulate a successful strategy. Its two vital components are budgeting and framing goals. Unless you know your current location, you will never understand where you are headed.  

They don't put off decisions: 
Delay can not only result in monetary losses but also lead to avoidable confusion and legal hassles. Postponing important financial decisions can inevitably lead to losses and crises. The cost of procrastination can dent your financial future by significantly reducing your corpus for long-term goals. The best way to tackle this bad habit is to prepare a list of financial task in the descending order of urgency, preferably at the beginning of each financial year.

They are proactive: 
Make sure that you research before making an investment choice and keep track of regulatory changes to avoid losses, scams and mis-selling. Riches are churned out by people who put in time, effort and money into research, they are satisfied with being satisfied, and so they seek out the best investing option, the best career avenue, and the best way to achieve a goal. They do not compromise on the quality or suitability of a product or service because it meets their basic needs. 

They don't react impulsively: 
Wait before taking action and avoid attractive options. Be it buying stocks that have suddenly shot up, redeeming mutual funds units at the first hint of a market correction, or changing your job just because you are offered a higher pay package are all impulsive reactions. Discipline is at the core of any aspect of financial planning. But how do you inculcate it stick to your decisions, strictly follow your budget, and don't digress from your asset allocation.

They review their portfolio: 
Monitoring is critical to know if you are on course. In terms of criticality, this habit is at par with planning. Your job is only half done if you draft a spectacular plan because, in the absence of a periodic review of your finances, you may never reach your goals. Monitoring the portfolio has a three pronged impact: it helps weed out non-performing assets, recalibrate investments if the goal seems out of reach, and maintain asset allocation.  

They diversify their investments: 
Follow this golden rule of investment to avoid the risks of concentration. Given the unmitigated obsession Indians have for real estate and gold, it's a wonder that they spare any thought or funds for other assets. Diversification is a key to a healthy portfolio because it not only helps protect your assets but also ensures their growth, since all asset classes do not move in the same direction at all times and you can never predict how a particular asset will perform, diversifying mitigates the risk by spreading it.

They avoid bad debits: 
To secure your future, it is important to learn the art of delaying gratifications and considering the impact of your actions, this is the reason debts are an anathema to most successful people. While some loans such as those for home and car are virtually inevitable, the financially prudent prefer to be rid of these at the earliest. Beside, stretching loan tenures is not advisable as it balloons the interest cost despite the tax advantage that some of them offer. Hence it is best to prepay at the earliest and avoid unsecured loans at all cost.

They cover risk: 
By securing insurance, they make sure that their dependents and investments are protected, as it is not possible to predict misfortune but we can have the right tools to tackle the issue ? this can be done by having the right insurance and contingency in place. Most successful people ensure that they cover all their risk adequately. According to certain research about 61% of the respondents have both life and medical insurance in place.
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