Financial Literacy – An avenue to prosperity


The dearth of financial know how can lead to a catastrophe as far as economic stability of an individual is concerned. This exemplifies the fact that efficient management of finances can prove to be a master stroke. Thus the need for learning the ropes of financial planning has become all the more crucial. In today’s competitive world, managing wealth can be pretty difficult, yet educating oneself regarding personal financial planning is unavoidable in order to live a happy, peaceful and successful life.  It’s never too late to gain knowledge about the ways to manage the earnings and invest for the future keeping liabilities under control. One should always keep in mind the basic mantra quoted by Benjamin Franklin, “An investment in knowledge always pays the best interest.”

Every acquisition cannot be reckoned as an investment; hence the distinction between an appreciating asset and a depreciating asset needs to be understood. Also in life, a crisis may strike like a bolt from the blue resulting in dire need for contingency funds. At such times, financially healthy people are well equipped to tackle unforeseen expenses. To augment wealth, one needs to be willing to take calculated risks. People who are skeptical of risk prefer to deposit money in bank accounts. However, in retrospection, this can lead to opportunity costs. Therefore every individual needs to be cognizant about the array of options available for personal investments. Some of the well known avenues of investments are equity stocks, mutual funds, real estate, bonds, PPF, NSC, etc.

Stock market provides good returns over a long period of time if the money is invested wisely. Investing in mutual funds is recommended for those who wish to invest in equities and bonds to balance the risks and returns. If one feels investing in stock markets is risky and there are chances for a market downfall, they can lock in their money in bonds. An investor can think of investing in various types of funds depending on the risk capacity. For those having a lot of cash in hand, investment in real estate is the ideal option. People belonging to the fixed income group may choose Public Provident Fund (PPF) as it offers almost 99 percent security. Another choice that is popular among rural Indians is the National Savings Certificate (NSC) wherein the minimum investment is Rs.100. Here, one has an option to choose either a 5 year or a 10 year lock-in period. With knowledge of appropriate investment tools, a person can manage his finances smartly and reap optimum returns.

For efficient planning of personal finances, financial literacy plays a very crucial role. Thus, gaining knowledge about wealth management and investments is of utmost importance. This can be aided by pursuing financial management courses provided by various educational institutions in India. One such leading institution, ITM University Online offers courses that prepare the students to take appropriate decisions in their respective careers and lives.