6 New Year Resolutions for Investors

The 6 Resolutions


Ever wondered why you have been tracking investments closely for years but are still not rich enough? Well majority of the investors are obsessed about market movements & prices more than they should be. Just think – does market movements matter when your investment in market linked financial assets is say, just 10% of your total wealth? An average Indian invests less than 10% of total portfolio in equity assets compared to say an US investor who invests over 40%. Majority of our savings is in Bank Fixed Deposits and physical assets. Do we track other assets so frequently? The answer to both questions is a big No. As investors we should always look at the big picture – ‘the asset allocation for the entire portfolio’. This is the only thing that matters the most. Getting the right asset allocation match, for all holdings across different products and assets, for your risk appetite & life-stage profile should be the primary focus area. This is first step of becoming a successful investor. If your objective is wealth creation over time, then obviously more allocation should be towards growth assets like equity compared to assets like debt.

Net Worth, which is like a balance sheet with assets on one side & liabilities on other, is one more way of looking at the big picture. Ideally your Net Worth should be positive, meaning assets should exceed liabilities. If more assets are disposable then even better. Keeping a good track of your Net Worth and not letting it reduce or go negative should be the second big picture to always keep in mind.


Knowledge is power and it is never too late to learn anything new, especially when it comes to money. One great resolution for the new year must be to learn more on personal wealth management and finance, in general. The idea is not to be become experts but certainly to know more on things that matter to us – like asset classes, financial products, services, insurance, estate management, taxation and so on. This can definitely help you ask the right questions, be more careful and get more involved in the decision making process. It will also help better communication and understanding with your financial advisor/distributor.

The question now is how to learn more? Well in an era where knowledge abounds, the challenge choosing the right topics & sources. You can start focusing more on personal finance magazines, books, articles on financial planning, and so on. It would be better to avoid shows and news on market analysis/dissections & their likes…


This resolution needs to no explanation for being on the list. Spending less has more to do with our self-control, discipline, foresight and priorities. It is also about realising that short-term consumption comes at the cost of future wealth creation. Fortunately, the same attributes also hold good for investing more. Remember, a rupee saved, is a rupee earned and a rupee invested is twice earned. We should also appreciate that is not just the big money that counts, but also small regular investing that can make big difference over time. In the new year, budgeting, planning and monitoring your cash flow can put you on the path to prosperity.


Everyone wishes to reduce their debt and create assets but it is easier said than done. A strong resolution backed with purpose and actions is needed to do so. Let us take the first step by realising that every rupee that you spend on something comes at the sacrifice of investing it. This is the ‘opportunity cost’ which is present in every decision you take. The day we start taking decisions with this perspective, our decisions would be smarter. 

Our resolution should be to work constructively to reduce liabilities, the expensive ones first and create appreciating assets more rather than depreciating assets. Talking of liabilities, remember there are ones that are cheaper & give benefits like home loans with tax deductions while others that are expensive but do not give any advantage, like personal & Credit Card loans. Similarly, in assets there are depreciating ones like car which loose value over time and hence our focus should be on building appreciating assets like investments. Further even in investments, we have to choose the right asset class as there are differences in returns & risks potential over different time horizons. The day we start “thinking” on these lines, we would have taken first steps to fulfilling the resolution.


This resolution sounds simple but can be difficult to implement. This resolution is about being simple and lazy about investments. Yes you read it right. Most of us tend to believe that wealth creation is about being very smart, finding short-cuts, taking risks, frequently changing the portfolio and so on. Well this is not true. Successful wealth creation in long term is fortunately a very simple and easy but what makes it difficult is that it can be boring to most of us.

Simple realities like starting early, saving & investing regularly, choosing the right asset classes and taking the right protection are the things that we often trivialize or look down upon. We don’t follow them with full commitment because they are too obvious and simple. There is no excitement in it. We have often quoted the famous research paper on “Determinants of Portfolio Performance” by Brinson, Hood, and Beebower (1986) which found that ~94% returns are determined by asset allocation choice and only 6% by security /product selection and market timing. But instead of focusing on the 94%, we tend to be concerned about the 6%.

As a resolution for an ‘investor’, we need to stop our focus on things that are not important and instead focus on th fundamentals of wealth creation, however boring and repetitive they may sound.


Financial well-being is never absolute. It is relative to the person you are, your needs and desires. Money can buy comforts but not peace. At the end of it all, what truly matters is how healthy, peaceful and happy you are, irrespective of how much wealth you have created. Wealth creation should never compromise these important aspects of life. We are individuals, persons first and investors later. Beyond money, one should first aspire to be wealthy with good health, with good relations, with good thoughts and earn respect while having a sense of gratification and satisfaction with what we already have. Only then can we be truly wealthy, even financially…

 The true test of our character will be our ability to carry out any resolution that we have created long after the excitement of the new year dies. Over time, we would realise that the discipline we learn and the character we build from setting and achieving any goal or resolution can be more valuable than the achievement of our goals or desires. Hence, it is important that we begin the new year in the right earnest and with the right things in mind. Once again, we wish our readers a Very Happy & Prosperous New Year!  

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