What you will learn in this chapter

After you have clarity about what Financial Freedom means to you, you’d want to figure out how the heck to get there. You want an answer to how to invest your money so that it grows large enough to fund your goals.

 

The question seems to be the almost the same as the one you were asking before you started reading this book. Yes, it is. But is the person asking the question the same? After reading Parts 1,2 and 3, I hope what you are seeking and your perspective on investing is different. 

 

Perspective is the way you look at investing. It influences the way you approach it and your strategy to get there. A flawed or unsuitable perspective cannot generate a successful strategy. And no strategy will work when your goals are not clear, obviously. 

 

So, before you embark on developing your strategy I hope

Now for some clarity on what exactly is Strategy. You have multiple goals and they happen at different times. But all of them are in the future, some are decades away. The future is never certain and things change at various levels-global, country, sector and company. The size of your corpus increases with time and your plans may also change. In such a dynamic and uncertain future, you need to make decisions that do not require you to compromise on your goals. How do you make these decisions? 

 

This is where your Strategy comes in play. 

 

Strategy is overarching long-term plan of action to achieve all your financial goals. It is not a summation of plans for individual goals done in isolation. It is plan where all your goals, your current and likely future savings are taken into account and plans for how you will invest are drawn up based on your specific context and certain assumptions. 

 

Strategy is choosing a direction for the long term. It also guides your decision making in different scenarios. It’s like the algorithm that makes the re-routing recommendations in your GPS navigation system. 

 

Strategy enables you to make decisions on asset allocation-how much you invest in different asset classes like stocks, mutual funds, debt funds, gold, international equity etc and how you move money across them under different situations. 

 

Strategy guides you to select the way of investing in each one of them; in a way that is suitable for you.  Thus, choosing when to be in the driver seat and when you let an expert do the driving is a key strategy decision.  

 

Investing is all about taking decisions and a clear Strategy enables you to make wise choices to reach your goals.