Get to know your mutual funds: SAS Fortune fund

SAS fortune fund

Our first post on the ‘Get to know your mutual funds’ series started with Epack investment fund, where we highlighted aspects such as the nature, investment strategy and performance of the fund. To continue the series, let’s have a look at SAS Fortune fund. Continue reading “Get to know your mutual funds: SAS Fortune fund”

4 personal finance resolutions to consider in 2017

personal finance resolutions

A few days ago, my Facebook page kept being flooded with a mix of big vocabularies, all in the name of setting 2017 resolutions. As usual, I never came across any resolution about personal finance management even though some colleagues wished for greater career opportunities. Well, personal finance resolutions normally don’t come into the picture.

New year resolutions have not been something unusual to some of us. However, many are those who fail to achieve anywhere close to their resolutions due to the outrageous nature of such resolutions. In fact, setting extreme resolutions may only lead to their partial fulfilment or worse, abandonment. Thus, a handful of realistic resolutions may help minimise the likelihood of non-fulfilment. If you’re yet to come out with your 2017 resolutions, then you may consider, at least, one of the four personal finance resolutions listed below.

  1. Increase your financial literacy level

Understanding various aspects of finance is essential for personal finance management. Like I mentioned in my first post on this site, I hardly recall any teacher or lecturer officially delivering lectures on how we should manage our finances. The responsibility of personal finance management lies with us. Financial literacy is a broad field. Thus, I don’t expect you to be a guru in it within just a year. Nevertheless, by showing interest, you can increase your proficiency in few concepts such as compound interests, mutual funds, time value of money, planning and budgeting. Choose and read on a specific area or two. After all, we all started from somewhere to where we are now. Maximising your financial literacy level will improve your skills and knowledge to make informed and appropriate decisions with your finances.

  1. Consider rebalancing your investment portfolio

Just like a balanced meal supplies the required nutrients needed by the body, a good balanced investment portfolio must provide the right blend of mutual funds, fixed deposits, stocks and other investments to fulfil the desired personal finance goal. Different personal finance goals require different blend of investment assets. For instance, one may opt to allocate a bigger portion of his overall investment to the fixed income sector, if his goal is to receive regular income in the immediate term (instead of in the long term). The investor, upon changing his financial goal, may need to adjust the portion of his investment allocated to the fixed income sector. A typical investment portfolio may look like the one below.

 

personal finance resolutions -Portfolio

Figure 1: An investment portfolio snapshot

 

As you can see from the snapshot above, the percentage of asset allocation in the ‘’fixed income/money market’’ sector had increased tremendously from 6% in 2004 to 20% in 2005. One reason for this could be that the fixed income sector outperformed the other sectors during that year. For an investor who would like to restore to the original percentages of asset allocation, rebalancing would be the way forward.

You might have even invested more in the fixed income market in the previous year due to their high returns. However, current indications might not augur well for the fixed income market in 2017. This is manifested in the decline of Treasury bill rates recently. Besides, the value of some mutual funds appears to have started picking up. Thus, considering a rebalance of your investment portfolio (by focusing on increasing the percentage of your equity investment) can be one of the worthiest personal finance resolutions for 2017. You can do this in two main ways. In one way, if you have extra money to invest, you can top up your investment in the equity without a corresponding top up in the fixed income portion. Overall, the percentage of the equity will increase, with a corresponding decrease in the fixed income portion. However, if you have no additional money to invest, you may withdraw some funds from the fixed income assets and invest it in the equity assets. Doing this will reduce the percentage of your fixed income assets while increasing that of your equity assets.

  1. Refine your expenditure to increase your savings rate

Your expenses in the previous year may have been on the extreme side. If that was the case, consider refining your expenditure in 2017 in order to free some money for savings. If you’ve had a pay raise to start the year, this may even be an added advantage by controlling your expenses such that the additional raise adds up to your savings.

See also: A simple 4-step approach to create your budget
  1. Start investing now if you have not yet begun

You may also consider investment as one of your personal finance resolutions if you have not done that yet. It’s better late than never. Taking a bold step in the investment journey can shape your finances and aid you to achieve your financial goals. Check on the following old posts to get your game up:

Six financial habits to put you in shape

Does it matter how much we earn?

Lifestyle inflation: The killer of our finances

The journey to financial independence: Understanding the basics