Holi, known as the festival of colours, is celebrated with much fervour in India and marks the onset of spring, also known as Vasant Ritu as per the Hindu calendar.
While there are various cultural significances, one of it is a triumph of good over evil and changing ill-habits. Hence the night before the water and colour play of Holi, a bonfire (also known Holika or Holika Dahan as per Hindu Mythology) is lit where people surround it and pray that their internal evils be destroyed. It is also symbolic of the power of truth.
The next day, called ‘Dhuli’ in Sanskrit, is when people from all walks of life come together to squish coloured powder and indulge in water play with friends and family — it’s a time for togetherness and love, laughter and fun. Hence, Holi is also said to be the festival of love and forgiveness.
Interestingly, Holi teaches us a variety of things about managing our personal finances.
Surprised? Read on…
1. Safety – Just as you take care of your skin and hair and ensure the safety of others while indulging in water play and colours to make sure that your Holi celebrations are delightful and memorable, when you choose an investment for your portfolio, recognising your own risk appetite and the risk-return potential of the investment avenue is imperative. For example, if you are averse to taking risk, you should stay away from investing in equities and consider bank Fixed Deposits (FDs), while if you are a risk-taker, it’s vice-versa.
2. Focus – When you spray colour and water, you would appreciate that some amount of focus is necessary. Similarly, when you approach investments or other aspects of personal finance, you need to be focussed and diligent. This is in the interest of your financial well-being, to accomplish the envisioned financial goals, viz. your children’s future needs (education and wedding expenses), buying a dream home, car, and your very own retirement amongst many others.
3. Diversification – Similar to the way the various colours of Holi add vibrancy and variety to our lives, your investment portfolio too needs to have variety. In other words, it should be well-diversified. Diversification is one of the basic tenets of investing. So, you should hold a variety of investment instruments such as mutual funds, stocks, bonds, bank fixed deposits, and small saving schemes as per your risk appetite and asset allocation.
By diversification, you ensure that all eggs are not in one basket. So, the risk is reduced and you also add liquidity and flexibility to your investment portfolio.
4. Enjoy Your Sweets – Apart from water play and colours, Holi is also the time to enjoy delectable sweet treats like Gujiya, Puran Poli, Malpua, etc. Each of these is made with a lot of patience, effort, and when you savour them you enjoy the fruits of that labour. Similarly, if you wish to reap the sweet fruits of hard work, saving enough, and investing prudently is imperative so that the journey of wealth creation and accomplishing financial goals turns more fulfilling. The sooner you start saving and investing the bigger your wealth grows due to the power of compounding.
5. Manage your debt burden sensibly – While a line of credit or certain loan comes handy, just as a friend in need and who also is a part of your Holi festivities, managing your credit relation is crucial. When you repay your outstanding loan diligently on time, it reflects well on your creditworthiness and improves your credit score. A good credit score can fast-track your next loan application when in need.
6. Review: While Holi signifies the victory of good over evil and burning down our ill-habits, review and introspection is necessary. When you handle your hard-earned money, review is necessary to weed out the ill-habits. Doing this can augur well for your financial health in the long run. Consider your investments as your friends that you catch up on and check if they are helping you grow your portfolio.
The frolic fun and savouries are all part of Holi. But, it is important to utilise a part of this holiday to review your personal finances; take it as an opportunity to manage your personal finances to serve in the interest of your long-term financial well-being and financial health.
The colourful Holi festival rejuvenates the dull winter spirit and prepares us for the brighter days ahead. So, brighten up your personal finance this Holi.
Wish you a very Happy Holi!
Disclaimer: This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.