It cannot be stressed enough that it is very important to save a percentage of your pay cheque every month. An accepted magic number is 10% while another is considered to be 25%. Ideally, one must save as much as they are comfortable with, be it 10% or 25%. It really doesn’t matter. But here is the catch. You save up 10% of your monthly income regularly. Even 25%, maybe. But what do you do with the money that accumulates in your Savings Account? This makes all the difference between simply saving money and wealth creation.
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We can put it to you simply. If you only save a certain percentage of your income each year, the money will continue to add up and you will have a reasonable nest egg. Wondering what we are trying to say?
Well, investing the money can be more rewarding. Put some of the accumulated corpus in a relatively risk-free investment like a Fixed Deposit or if you’re a little more adventurous, a Mutual Fund. You can build a nest egg that will earn you interest as you continue to add money to it every month.
Additional Reading: Don’t Just Save, Invest
Start investing the money
Making financial investments are often based largely on trial and error. Seldom does an investor strike gold the first time with investments.
If you are new to investing, don’t worry. As you grow older and wiser, you will be able to formulate intelligent investing strategies based on your life stage and individual requirements.
You think that you cannot do it all by yourself when it comes to investing? For the professional advice that will push your investments up a notch, enlist the services of a financial advisor. Instead of blundering around in the dark, the professional financial advisor will guide you on making the right investments in the right products.
You can also read up about the different investment options out there and decide the best route for you.
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Learn about investing
Learning good financial habits from an early age is very important. Investing is an integral part of building wealth and achieving financial success. Investing can be a rather confusing prospect because there are so many options to choose from. You can make it simple by identifying specific reasons for why you want to make various investments.
Should you invest in Fixed Deposits or Mutual Funds? Which types of Mutual Funds?
Here’s a tip: When you invest, don’t fret about any short-term market fluctuations. For better returns, hold your horses and remain invested for the long term. Oh, alright, at least for a period of five to seven years.
Set Investing Goals
Always explore Equity #MutualFunds for your long term goals. They provide you the best chance to beat inflation over many years.
— Adhil Shetty (@adhilshetty) July 7, 2017
A goal helps motivate you to make investments. Making investments will be infinitely more rewarding if you set specific goals for various investments. This way you can set financial milestones for yourself and you will feel a sense of achievement when you realise your goals. Your goals could include saving up for the down payment on a home, your retirement or children’s education or marriage.
Ensure your finances are in order
When you begin to invest regularly, it is essential that you maintain your finances and stick to your monthly budget. It is always a good idea to begin investing when you are debt-free. Holding on to sizable Credit Card dues and trying to invest is counter-productive because what you are investing, you are losing by paying that high rate of interest on your debt.
Wait. Before you begin investing money over a period of time, you must consider creating an emergency fund to help you in case you face a sudden financial crisis.
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Remember not to put your emergency fund into investments. If you do that, you will not have easy access to the money meant for emergencies, when you need it the most.
You could, however, park your emergency fund in Liquid Funds, which offer a higher rate of interest than your Savings Account.
Follow this handy guide and you will be on the right path to building wealth wisely.
Additional Reading: Saving v Investments: Do You Know The Difference?
If you think you’re ready to start investing, how about starting with a Mutual Fund? Thanks to technology, you can do it online and in just a few minutes. Check it out.