Planning to invest? Tips to plug the income-expense mismatch

Planning to invest? Tips to plug the income-expense mismatch
News from Economic Times:

Uma Shashikant

Personal financial management begins with the management of cash flow. It is good to have financial goals and investment plans, but we may not make much progress if our routine transactions do not match our income. Investing for the long term requires a stable and consistent surplus after meeting both routine and unexpected expenses. Unless this happens and adequate financial discipline is maintained, long-term saving and investment plans will face risk. Except for the very affluent, households must consciously match their expenses with income.

When inflation puts pressure on the consumption basket, with no corresponding increase in income, the ability of a household to manage its routine transactions is strained. Festivals, weddings and travel put additional pressures on expenses. Illness, hospitalisation, and losses from natural calamities are another category of unexpected expenses.

It is sensible to segregate such unexpected losses and buy suitable insurance cover for them. It saves the household from bearing expenses that can dent the ability to save and secure the future. Several poor households are seriously debilitated by illness. As a rule, insuring to save unexpected expenses on health and damage to assets is a sensible decision.

Some borrowing ma…………… continues on Economic Times

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Three timeless investment tips
News from Free Malaysia Today:

Avoid predicting the future. You will get it wrong more often than you think. Nobody has a crystal ball.

FEATURE

By Lee Ching Wei

1. Pay attention to the cost of investing

Cost matters.

It is one of the few things in investment that is predictable and controllable.  Every dollar paid in cost is a dollar less in potential profit.  And it all adds up over the long term.

The obvious costs of investing include administration/processing fee, entry fee, transaction fee, brokerage, commission, stamp duty and taxes.

The less obvious ones are opportunity cost (what you give up for taking a specific action), personal flexibility (e.g. obligation to service your mortgage for the next 20 years), and stress (e.g. losing sleep over an investment).

2. You know less than you think

Avoid predicting the future.  You will get it wrong more often than you think.  Nobody has a crystal ball.

Yet, people do it all the time. Investment analysts/stock brokers compile lists of stocks with Buy/Sell recommendations based on their predictions of future company performance. Economists make calls o…………… continues on Free Malaysia Today

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