Have you recently started earning? Or are working on the foundation of an independent life? We are sure you’d be enjoying the perks of having ample money at your disposal, using your money to build the life of your dreams. While you’re making the most of the present, are you preparing for the future? As you earn more and more with time, you should know more than simply working for an income.
This is where investments come into the picture. Prioritise saving a certain amount of your money and invest it. Small savings today will make a big difference tomorrow. However, you should never blindly invest in instruments just because you see your peers earning out of it, or because you see the news.
Being new to the capital market, confusion is natural if you lack knowledge of markets and investments. But you can always work on removing that lack, right? Here are a few tips on investments for you to consider before you jump into the ocean.
Open an independent bank account
When you are starting a life of your own, one of the first and most important steps to ensure financial independence. Open a bank account in your own name, and keep track of the cash flow in your account. Doing this will let you make your own financial decisions, and make it easier to act on them, without having to wait for approval.
Start with money allocation
With money at hand, all ready for disposal, don’t start spending it right away. Prepare monthly/annual budgets and allocate funds to various goals, like entertainment, education, personal, etc. People tend to spend first and invest what’s left. However, ideally, you should park a certain part of your income for investments before spending. Save for yourself first, then spend the rest.
Start with small SIPs
SIPs are Systematic Investment Plans to invest in mutual funds – one of the wisest options. This tool gives you an option to start monthly investments as low as Rs. 500 a month. Decide your investing goals, find a fund that suits your expectations and invest monthly. Do not touch this corpus before the said goal is achieved. This will help you be ready for contingencies, and save your pockets from burning a big hole when you start small.
Check your risk appetite
Investment is a wise option, but still full of risks. Before choosing how much and where you invest, study the extent of risk you can afford to take. Calculate the reward for the risk you’re willing to undertake. This will help you plan and manage your investments better, and choose options that match your expectations.
Research before investing
Don’t invest in the first instrument you come across or trust every tip or advice you receive. Before you decide where to invest, research the market. List all the options you have, the risk-reward ratio, all pros, and cons of putting your money in the said instrument. Verify the credibility of the sources of information you get. Watch videos by investment experts on YouTube, read online blogs on investments, talk to financial advisors, and read books on finance to gain knowledge about the market.
Don’t trust Ponzi schemes
Ponzi schemes promise high returns with relatively very low risk. The actual rule of the market is simple – the higher your returns, the higher your risk. If you wish to win big, you need to stay in the market for the long haul and make wise decisions. This is why Ponzi schemes are misleading. These may work in the short term but aren’t effective for the long term.
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The bottom line:
When you invest, you do it for your future. Your choice of investments now will determine your financial position down the line. Go for investment instruments that best suit your goals and vision. In today’s tech-savvy world, there are ample tools and services to support you in making informed decisions. Make the most of your money, and let it work for you more than you work for it.
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