Building Your Financial Pyramid-Series-V (Level 4 Speculation):


The stronger the foundation, the bigger the structure it can support.

Our foundation is laid. At this stage, you might be settled into family life, with the protections against risk and uncertainties. Also, your life goals such as children’s education, homeownership, retirement, etc., are attached and you have created a diversified portfolio.

The three previous levels might not look that interesting and we somewhere feel that everything is going great. These simple yet significant steps of your financial pyramid will make sure that you are prepared to stand tall when the unimaginable situation arises. It will give you the courage to at least handle the part that lies under your area of control.

You have so far fulfilled your role in securing your loved ones’ present and planned for their better tomorrow. Now you can move higher to the new level which is ‘Speculation’.

As the term suggests, speculation is basically no different from betting or gambling! An example of speculation would be trading in shares with the intent of selling them in a week or two or making speculative, leveraged trades into futures and options with a short-term horizon.

Though speculation may lead to washout losses or windfall profits, one need not avoid it altogether. It is, after all, the only really exciting aspect of Financial Planning! It is advisable, though, to speculate last of all (after taking care of your protection needs, savings and investments).

Futures & Options Contract

Futures and Options are derivative contracts. Derivative – they derive their value from the underlying stock. Fluctuations in future or option prices are based on the actual movement of the stock they represent.

Contracts- futures came before options. Both of them are contracts binding a buyer and seller to exchange a stock, later in the future on a specified date, at a predetermined price. It acts as a hedging tool for your portfolio as well.


Well-Planned commodity investment can be beneficial for your portfolio.

Often investors do not feel confident about investing in commodities but think about precious metals like silver, gold, and platinum; they offer clear protection during inflation and times of economic uncertainty.

Real Estate

Investing in this asset class will help you diversify your portfolio to balance the risk. Irrespective of high capital requirement and liquidity issue this class appeals to the majority because of its physical aspect. People get lured by the short term gains but they don’t see the limitations attached with it in hindsight.

Now Listed Infrastructure Investment Trusts (InvITs) and REITs are also an investment option for you. It is quite similar to Mutual Funds also the ticket size is less and it can be a transparent, and stable investment option for retail investors due to the various regulatory stipulations.

Foreign Reserves

Trading in only Forex derivatives is permitted as per the Indian law that too only on the recognised exchanges. Trading in this market requires you to stay alert and updated with the changing guidelines and other relevant information.

Before reaching on Speculation level, it’s just for you to cover each and every step recommended in the below levels. Another thumb rule of speculation is to do it with money that you can afford to lose in entirety. That is, if the money value of these speculative were to unluckily become zero, it will not cause you any significant distress or financial strain. The mistake most people make when it comes to speculation is that first, they speculate with their entire free surplus and second, they speculate before taking care of their higher priority financial planning needs first. So it is must to have more clarity of your assets and liabilities in order. 


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About the author

Ms Mashru is a CHARTERED WEALTH MANAGER (CWM ) by qualification and a Financial coach by choice. She started her career in finance and later realized her passion lies in discovering peoples financial DNA. She is a founder of PLANTRICH CONSULTANCY LLP and the Co-founder and Chief Financial coach of VAMA PLANTRICH LLP. She has also been on the panel with NDTV and has been awarded an innovator in finance by international Women Leaders Forum for 3 consecutive years. She has also been a Million dollar advisor for last 6 years. She has bagged 25 more accolades in the last 10 years. She also takes lectures for various courses on personal finance and has been a guest lecturer at business management colleges. She is frequently invited to television talk shows as well. She has been certified by George Kinder on seven stages of money maturity.



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