She is a Bollywood actor, reality TV host and the most searched person on internet in India for four years in a row. She is Sunny Leone. She is also a business woman, and was a control freak about money management in her initial days. Here is what she thinks about money:
1. Financial independence is important
As a child, Leone’s parents taught her the importance of being financially independent. “I wanted to be on my own ever since I was really little. Also, my parents would tell me over and over again that you have to be independent. That stuck with me.” Financial security and financial independence can make you feel more secure and confident. You should not only have the ability to earn but also manage your money well.
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2. Diversify you investments
Leone’s investment portfolio has a good mix of stocks, mutual funds, retirement funds and real estate. With respect to your investments, diversification means having a selection of more than one type of security in your portfolio. Diversification is a risk management strategy since prices of different assets often move in opposite directions and having more than one asset in your portfolio helps limit the risk or impact of sharp price changes in one asset class. The logic is: don’t put all your eggs in one basket.
3. Do your research before investing
Before moving to India, Leone and her husband did their research. Only after they were sure about the statistics did they decide to move to India. Similarly, when Leone decided to launch a perfume line, she did her research to see how it would work. This holds true for investments as well. Knowledge is power. Before you decide to invest in any financial tool, make sure you have all the necessary information about the instrument. When you pick a financial product, do a thorough study about the underlying asset, historical performance and other factors. Only after you are sure about the financial instrument, should you venture into it.
4. Take professional advice
Before Leone got married, she took care of all her finances. Now her husband manages her money. “His business background and mine are totally different. And he just completely streamlined everything and helped me organise things because I was growing faster than I could manage. I needed help.” If you don’t know how to manage money or don’t have the time for it, then seek an expert’s assistance. Investment decisions taken due to ignorance can turn out to be wrong and lead to losses.
5. Take calculated risks
Leone says she is a calculated risk taker. “If I am not 100% convinced that this is going to be financially viable, I don’t go for it. Now, say, something doesn’t work, I need to be okay with what is lost.” Before you start investing, you need to understand your risk profile. Once you know how much risk you can take, you can invest in assets accordingly.