18 May 2023
Many of us may have experienced financial losses and have often felt lost during shocks like recession, bank collapse, demonetisation, or a Covid-like pandemic. Or even personal crises like loss of job or business failure.
Ever wondered what the reason could be?
In most cases, it’s our lack of knowledge on how to handle crisis-like situations and keeping our finances safe.
In the current volatile and fast-changing economic environment, a lack of financial education can be dangerous for personal and future growth. One should be equipped in subjects of personal finance planning, savings, banking and investments from a young age to strengthen the financial future.
The knowledge of finance, if applied accurately and in a timely manner, can help you in your long-term wealth creation journey, irrespective of your income level, at an early age.
Financial education can help individuals in the following:
Understand the financial regulations: We should be committed to understanding our tax and debt obligations to spend and invest money wisely. Educating ourselves about the financial and tax laws can also help us avoid violations.
Planning personal finance: Learning how to manage your money can keep you secure for the rest of your life. Money management essentially includes a basic understanding of your cash inflows and outflows. It also means how one should allocate their income to help it grow, besides planning for emergencies.
How to reach financial goals: Financial education helps you understand which investment vehicle suits your financial goals. Be it a property investment, commodities like gold, capital market, or mutual funds. Each asset investment carries a slew of risks and benefits. Therefore, one must study and make time to understand the risk and advantages associated with each asset to calculate the time and funds required to achieve the objective.
Protect from fraudulent activities: Before we invest our money, we should have conducted detailed research on who we are investing money with. Background research on companies, individuals and even investment firms like mutual fund houses is necessary to ensure that your money is going into safe hands. One should be careful not to invest in ponzi schemes or schemes not authorised by the country’s regulators like SEBI and RBI.
In conclusion, being financially educated can cause less stress and anxiety and help you secure a better future.
These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. The distribution of this document in certain jurisdictions may be restricted or totally prohibited, and accordingly, persons who come into possession of this document are required to inform themselves about and observe any such restrictions. Investors may consult their financial advisors and/or tax advisors before making any investment decisions.
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