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5 Money Mistakes The Young Make And 5 Kickass Solutions

Worst Money Mistakes To Avoid

Worst Money Mistakes To Avoid

You’re probably thinking that you do not need constant reminders for starting investments early. You can do without them, for sure. But we can never emphasise enough, the importance and benefits of investing early – while you are still young and strong! Thank us later.

Promise, we won’t ask you to curb Friday night outs or bottoms-up championships. All we ask is that you spare a few thousands and invest it in the right place. Your money will like it a lot more than being swiped away. Moreover, it’ll reward you by multiplying itself. If you want to know how to save these few thousands, read our article, ‘11 Things You Can Save Money On Every Month’.

Let us shine a light on 5 money mistakes you should avoid making in 2016 with 5 kickass investment solutions. Ready?

5 MISTAKES TO AVOID

Mistaking Savings For Investments

Most youngsters think that savings equal investments. The returns on a savings account in no way match up to those from a well-planned investment scheme. It’s like drawing parallels between a hatchback and a luxury sedan. Once this difference is understood, the next step is to explore various investment tools and pick those perfect for your current salary and your future requirements.

Not Asking Questions

The lack of proper knowledge about investment options often leaves the young feeling tongue-tied in front of investment agents, who have the gift of the gab. Don’t let this stop you from asking questions. Bring your bold self to the forefront when preparing for an investment. You must know about all the costs and charges involved before you give yourself the green signal, and not after the money is locked away. If you are still unsure, take the help of someone who is well-versed in the science of investments and can do the talking on your behalf. The end result will work in your favour.

We at BankBazaar are always striving to make money matters easy for you. If you are looking for Loans or Credit Cards, or just looking to do some financial reading, explore our website and blog. We have everything covered. Well, almost everything!

Prematurely Withdrawing From Investment Schemes

Some of us start investments early, but find it difficult to sustain them. Living in the world of instant, we also look for instant ways to solve our money problems. An FD or a PPF which should have reached maturity without disturbance, is often broken to meet short-term financial needs. This shakes the investment structure at the very roots. You not only lose out on the interest but also pay a breaking charge. Unless you have no other choice and breaking your investment is your only option, keep away from doing this.

Building A Mountain Of Debt

The first thing most people do after getting a job is apply for a Credit Card. While a Credit Card can be a good friend, it is important to know your spending limits. Don’t get carried away by the ease of getting everything with a swipe. Know your limit and only swipe as much as you can repay at the end of the month. Just like it is for Credit Cards, be mindful of any debt you might be accumulating. Plan your expenses in a way that you are able to pay down your debts in a timely fashion.

Keep An Eye On Inflation

Inflation is one of the most overlooked criteria when exploring investment options. The big sum assured to us in the long run catches our fancy just like a sports bike overtaking us on a highway. Don’t just say ‘yes’ to the big number without making a few calculations. Do a bit of math and see if the sum still seems like an attractive prospect after 15 or 20 years. Factor in the inflation growth rates and then decide whether the sum assured would be good to sustain you.

With the problems covered, it’s time to uncover some solutions.

5 KICKASS SOLUTIONS

Sign Up For A Systematic Investment Plan

Even the name sounds promising, doesn’t it? Moreover, it suits the footloose and fancy-free lifestyle of the young. SIP offers the benefit of big returns on small investments. If you are investing in an SIP, essentially you are investing in a Mutual Fund. You invest small sums at regular intervals – weekly, monthly, quarterly or yearly – for a certain period of time, and then you let the investment works its magic. Let the years roll on, and then one day when you decide to reap the fruits of your patience, you’ll be pleased with what you get.

An SIP is also a smart investment option. Your money is pooled with those of other investors to make a big fund. The returns on the fund is divided among the fund members to match their respective contributions. The good part being, SIP diversifies your money into different options. This hedges you against any ups and downs in the economy.

An SIP is definitely a smart way to begin investing. It’s easy on the pocket and offers attractive returns. It’s a disciplined approach to making investments. If somebody reprimands you for being careless now, tell them about your SIP plan.

TIPS: Spreading out the risks is the focal point of any investment. How do you achieve it?

Pep Up With A PPF Account

Retirement may be far-off, but once it comes around, it will be a strong foe. Start investing in a Public Provident Fund now and you’ll conquer retirement hands-down. An added perk being, a PPF account comes packed with triple-force power. You receive tax benefits under section 80C, earn tax-free interest, and receive the total sum on maturity, also tax-free! Makes you want to look forward to your retirement. No, maybe not. But this investment will bring home a salary to keep the party going even after retirement.

TIPS: Locking away money till you reach retirement; not too sure you want to do that? You can withdraw from your PPF account –

Tend to a Term Life Insurance Plan

A Term Life Insurance Plan is the best way to safeguard the future of your family.  No matter how much you save up, it might not be enough to sustain your family in case, god forbid, something happens to you. For an affordable premium, you can secure the future of your family. You can also raise your policy cover along with an increase in your salary.

TIPS: Too many policies, it’s confusing!

Bring home a Health Insurance Plan

Agreed, you work-out regularly and are cautious about what you eat. In spite of this, health can sometimes get into a bad mood and throw tantrums. In dark days of health, a Health Insurance Plan will be like your friend – the one who stays by your bedside till your recover. It usually costs quite a bit of wealth to win back good health. While advancements in medical technology have helped increase the average life span, they have also made healthcare costs skyrocket. Hence, a healthcare plan is a must, and it’s only wise to get one while you are still young and healthy.

TIPS: You might think, it’s too early to get yourself a Health Insurance Plan. We suggest you start early.

Find yourself a Fixed Deposit

It’s one of the easiest investment plans and we Indians love it. It’s secure and offers good returns. Moreover, it’s easy to invest in an FD, and you don’t have to visit the bank for it. Just use netbanking and get your FD online. You will also have the option to either receive interest on maturity or on a quarterly basis. Click here to know more about Fixed Deposit interest rates.

TIPS: The lock-in period for an FD is worrisome. What do you do in this case?

To get multiple investments going is not an easy affair. Just like they say – don’t place all your eggs in one basket – you don’t have to start all your investments at one go. Take them one at a time. Start with one, and slowly add the rest to the portfolio.

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