We all have heard of investment and at some point or the other we all want to invest and have a better and secure future. But most of us don’t know where to start.
Here are few tips to begin:
- Simplification : Simplify your finances. No need to have many bank accounts that they get difficult to manage. One or max 2 bank accounts in joint holding with your partner / parent in either or survivor mode should suffice. Having many credit cards just adds to the confusion. Just 1 credit card should be enough to make your life simple. Make sure you pay every single paise upto the last decimal place for the credit card bill. Don’t get into the loop of minimum amount due. It’s a vicious circle. Keep a note of all your investments at one place.
- Emergency fund : Keep aside at least 6 months expenses in a liquid fund which can be used in emergency. These funds give you a little more than FD returns and at the same time you can have access to this money within 24 hours if required.
- Insurance : no need to buy endowment and money back policies which have impressive return charts. They don’t work the way its shown. All you need is a good health insurance which can cover your medical exigencies and a term insurance if you have a family to look after. NOTHING BEYOND THIS IS REQUIRED IN ANY FORM OF INSURANCE.
- Goals: Set your financial goals. Short term (3-6 months), Medium term ( 1-3 years) and Long Term ( 3 years and beyond). Accordingly, invest your hard earned money.
- Asset Allocation: Depending on your goals, risk appetite and investment horizon, its pertinent to follow a proper asset allocation mix to make sure your investments are available for you when you need them.
- Diversification : Don’t over diversify. A lot of schemes are not required in the portfolio. They dilute the returns and doesn’t really solve the purpose of long term investing.
- Nominee & Will : Make sure all your investments have a nominee. In any unfortunate event, your investments will not get locked out. The nominee can easily claim the investments. Also, write a will to avoid any disputes once you are gone.
- Tax Saving: When we are earning, we are also liable to pay tax. But we do have certain schemes In mutual funds and other instruments which help you save tax if you invest in them. Under section 80C , 80 CCD (1B), you can get tax benefit.
Just keeping all the above things in mind can sort your life and you can be rest assured.
