This Christmas, don’t be a Grinch – gift yourself a bright financial future

’Tis the season to be jolly. Christmas is right around the corner. And so is Santa; reading wish lists and making his elves work hard to stuff the goody bags. It may be a myth alright, but it’s a good one – one that neutralises the bitterness of the rest of the year and brings hope, joy and gifts. The excitement of receiving gifts at yuletide doesn’t ebb as we grow older. Our perception of gifts changes. The words of American author Dr. Suess begin to make sense: “Maybe Christmas, he thought, doesn’t come from a store. Maybe Christmas, perhaps, means a little bit more.” This festive season do a little bit more – seek to secure your financial future.

A holistic financial plan for all life stages: A financial plan is a GPS on one’s financial journey. And since no two people have the same destination, it is best not to follow someone else’s route. Each one has different needs, goals, income flow and responsibilities. Go for​​​ individualistic holistic financial planning, which covers tax planning, children’s future requirement, house purchase, exigencies and retirement. Adopting a goal-based investing approach can help clear these milestones across life stages.

The following steps can help reach your goals:


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. Individuals with higher risk appetite and long-term goals, such as retirement planning, can look at equity mutual funds for wealth creation. For short- to medium-term goals, such as wedding or meeting regular expenses, there are liquid, overnight, ultra short-term and hybrid mutual funds. But remember, mutual funds ar​e market-linked, hence they are bound to be volatile vis-à-vis conventional products ​

A systematic approach to goal attainment: Mutual funds offer systematic plans that can give additional mileage and convenience while attaining goals across life stages. Systematic Investment Plan (SIP) needs no introduction. It is quite popular among retail investors. Through a SIP, investors invest a fixed sum of money at regular intervals. It has emerged as a powerful tool among investors to meet their goals across life stages and avert equity market volatility by investing via SIP in equity mutual funds. SIPs are also pocket-friendly and as investors contribute a fixed sum during all market phases, the cost per fund is averaged out. The longer the time frame of investing, the greater could be the benefits of averaging.

In case of windfall gains, such as bonus or inheritance, investors may be tempted ​to invest lump sum in equity funds. But the thumb rule is to invest in equity progressively over a period. Simultaneously, the amount can be invested with potential stable returns from debt/ liquid funds. That is possible by opting for the systematic transfer plan (STP) feature – transferring from debt/ liquid funds to equity funds at regular intervals.

Some financial goals require a regular flow of funds - school fees or household and medical expenses especially in post-retirement. While SIP and STP deal in investing and transferring money among various investments, respectively, the systematic withdrawal plan (SWP) allows money to flow back to the investor for end-use. SWP facilitates regular income to investors to withdraw a fixed sum of money from a mutual fund scheme at regular intervals

Here are a few other crucial aspects:

Aspiring for debt-free life: One takes loans for, say, car, house, or education. Often, a mismatch between income flow and liabilities causes financial stress. Hence, it is essential to streamline debt and try to pay it off as soon as possible. Prepare a monthly budget and stick to it, avoid overspending on unwanted stuff, save more and live a more secured life.

Emotional stability precursor to financial security: Emotional stability calls for patience – so when the market conditions become volatile or the economic scenario is uncertain, overcome your emotions of fear, hold on to your investments as this shall pass too. The year 2020 is a classic​ example, when equities bottomed out in March, only to recover thereafter and touch a record high in November. So, be disciplined; avail of systematic investing in mutual funds. Numbers don’t lie: an investment of Rs 5.40 lakh in the form of a monthly SIP of Rs 1,000 on the first day of the month from December 1, 2005 in equity funds (represented by CRISIL Equity Fund Performance Index) has grown to Rs 14.161 lakh with an XIRR of ~12% for 15 years ended November 30, 2020. Besides, discipline and perseverance, acceptance is key. While undertaking financial planning, accept your mistakes, ask for help and take corrective actions that could help build a better financial future.

1Source: CRISIL Research​​

Summing up

So this Christmas, be your own Santa. Give wings to your dreams by taking prudent investment actions and sowing via avenues such as mutual funds. But be patient for your harvest. Also, revisit your portfolio to weed out under-performing instruments, always keeping your risk profile in mind.

Disclaimer: Any comparison/data mentioned in this material is for general information only and not intended to be relied upon as investment advice and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Information and content herein have been provided by CRISIL Research, a Division of CRISIL Limited, and is to be read from an investment awareness and education perspective only. Recipient are advised to seek independent professional advice before making any investments. The views / content expressed herein do not constitute the opinions of SBI Mutual Fund or recommendation of any course of action to be followed by the reader. SBI Mutual Fund / SBI Funds Management Private Limited is not guaranteeing or promising or forecasting any returns.Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

An Investor Education and Awareness Initiative by SBI Mutual Fund

  1. Investors should deal only with registered Mutual Funds, details of which can be verified on the SEBI website (https://www.sebi.gov.in) under ‘Intermediaries/Market Infrastructure Institutions’.
  2. Please refer to website of mutual funds for process for com​pleting one-time KYC (Know Your Customer) including process for change in address, phone number, bank details etc.
  3. Investors may lodge complaints on www.scores.gov.in against registered intermediaries if they are unsatisfied with their responses. SCORES facilitates you to lodge your complaint online with SEBI and subsequently view its status.​

Mutual Fund investments are subject to market risks, read all scheme related document​s carefully.​


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An investor education initiative, SBI MUTUAL FUND.
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