- Free yourself from debt because it can hamper your savings.
- Try to cut down on unnecessary expenses like restaurants etc.
- Buy groceries when on sale to earn that extra savings.
- Keep a note of your expenses, so that you can analyze where you can cut down on unnecessary expenses and save that money.
Some people do not get the motivation to save small and due to that they never start savings. But if you actively plan your expenses and take the first step, even if the start is small, you will automatically get the motivation to find more ways to save money.
It’s all about taking the first step.
- You should have an investment goal.
- You should be consistent to see the desired results
- Know the taxation structure for both equity and debt mutual funds
- You should know what exit load is applicable to the schemes you have invested
- Before investing, you can have a look at the portfolio of the scheme and it’s past performance
- Seek expert advice if you are just starting out.
- Choose the funds according to your goals and risk appetite.
- Gradually increase your investment to accumulate great wealth.
Following are some Best investment tips
1.Find an advisor who can guide you about the best options according to your age, future goals and risk appetite.
2.Start early to get the benefit of compound interest from the early stages of investment.
3.Don’t follow any investment tip blindly without expert advice.
4.Do not copy anyone’s investment portfolio.
5.Don’t put all your eggs in one basket. Put your money in diverse funds to lessen the risk due to volatility of market.
6.Define your budget for savings and stick to it.
7.Set long terms goals and monitor your investments accordingly.
8.Do not take any decision on the basis of short term ups and downs.
9.Every time is right time to start investing. If you wait till you think it’s the right time to invest, you might loose good opportunities.
10.Continuously monitoring your investments is important. If you think a particular investment is not giving desired results then you can switch the money to something which is more beneficial.
Following are some better returns investment plans than FD:
* Public Provident Fund – The current rate of interest for PPF account is 7.4% p.a. You can watch our YouTube video on PPF for more detailed information – https://youtu.be/HW07P7yXFWU
* National Savings Schemes – The current rate of interest is 6.8% p.a with a 5 year lock-in period. The tax benefits of Section 80C (i.e, exemption upto Rs1.5 Lakhs) are available
* RBI Floating Rate Savings Bonds – The current rate of interest is 7.15% p.a with 7 years of lock-in. The interest rate of RBI bonds is always 0.35% higher than National Savings Certificates.
* Tax Free Bonds – These bonds are issued by government owned and public sector undertakings. They are available for 10 yrs, 15 yrs and 20 yrs as per requirement. The interest rate varies between 7% to 9% pa. As the name suggests, the income from these bonds is tax free.
* Mutual Funds – There are mutual fund schemes which provide fixed income. Under Monthly Income Plans, the investor receives a regular monthly income in the form of dividends. The dividends are tax-free.
* National Pension Scheme (NPS) – Any individual citizen between 18 to 65 years of age can open an NPS account. The average ROI for NPS since it’s inception is around 10%. It is a government-sponsored pension scheme. The proceeds of NPS are tax-free.
When investing for retirement, remember the following :
- Have an Emergency Fund – You should have at least 3 to 6 months of your expenses as an emergency fund in liquid form like a savings account etc.
- Have a Health Insurance – At this age, people usually undergo health issues and this may lead to high medical expenses. So, having a health insurance plan is a must.
- Be disciplined – Once you have decided your estimated retirement corpus, you need to put efforts and consistently save for it. Only then you will reach the desired goal and lead a stress-free post retirement life.
- Focus on diversification – When investing for retirement, do not choose only one option. Choose to diversify your investment.
The government has launched various schemes for retirement planning like the Senior Citizen Saving Scheme, Pradhan Mantri Vaya Vandana Joyana etc. There are many other fixed income instruments like Post Office Monthly Income Scheme etc.
- Doing it all by yourself – Professional assistance to manage your finances is necessary and should not be avoided.
- Avoiding Budgeting – It is important to undertake proper income and expense analysis to have a clear understanding of current financial position.
- Mixing Insurance with Investment – Both insurance and investment have different objectives and so should be treated separately.
- No saving for emergencies – When you are not prepared for unforeseen situations and are then forced to spend your savings.
- No proper investment planning – One cannot stress much on the importance of investment planning for a financially secured future.
- Paying off debt first – It is important to save first and then meet the liabilities and should not be done the other way round.
- Tax planning – It is avoided by many but you can also save money by proper tax planning
If you have not started saving yet, then it may seem difficult at first.
With a long list of necessary expenses, it may feel like it is not possible to cut down on any expenses and start saving.
But, when you take the leap of faith, slowly you get even more motivated to save more.
At first you can start as small as 500 or any amount as per your current financial situation.
When you want to start saving money, it is always better to start daily rather than monthly. See how it works.
For example, if you start with saving Rs500 everyday. Then, at the end of the month you will have a good Rs15000 savings. That’s quite a good amount when you are just starting off.
See, it’s easy to start with saving a small amount daily.
For saving, a proper budgeting is required.
Then comes investing. There are many options to choose from.
From, Fixed Deposit (FD), Recurring Deposit (RD), Post Office Savings, Mutual Funds, Gold, Bonds, Real Estate, NPS and more.
One can anytime start with an SIP in Mutual Funds. Systematic Investment Plan (SIP) is monthly investment done in mutual funds schemes.
If you start with Rs15000 as monthly savings, for example, then you can choose to invest Rs5000 in 3 mutual funds via SIP option.
Needless to say, the choice of funds will depend upon the term of investment and risk appetite.
When you start savings and invest it wisely, you see your money growing. This way you have taken the step towards wealth creation.
This will further motivate you to start saving and know more about good investment opportunities.
The most important thing to remember when planning for your retirement is to consider the rate of inflation. This means your expected corpus for retirement should be calculated by adding up the inflation rate in the amount which is required by you (today’s value).
After you are clear with the estimated amount which is required by you at the time of retirement and deciding the age of retirement, then the planning process will start.
The retirement budget is calculated by keeping in mind the current lifestyle and the kind of lifestyle you want in retirement. To achieve a certain amount of money in a certain time period, systematic planning is required. This can be achieved with diversifying your investments.
There are many investment options available for retirement planning. The options are suggested based on two situations – first, if a lump sum amount is required at the time of retirement and second, if regular monthly income is required. There are monthly income plans, pension plans, senior citizens saving schemes, tax-free bonds, national pension scheme and more.
One needs to plan smartly to retire early with the required corpus.
To retire early, you need to plan for it early.
Well, everyone knows how important investing is to create wealth but sometimes people do not have the inclination towards investing or are not happy with their current investments.
It is important to know that there are many great options to invest your money in. And like it’s said “make your money work for you”, you can make your money work for you to get good returns.
Everything in life has a purpose. And so does investing.
It is important to ask yourself, Why do you want to invest? And What is it that you want out of your investments?
Many people follow the crowd or trend and start investing without really analyzing their objective behind it.
So, first comes the objective.
Next, comes budgeting. Now, when you have decided your goal. You need to see what amount you can set aside for your investments to fulfill your goal.
One needs to be clear about it. Note your current income and expenses, and decide an amount which you can invest and stick to it.
Due to tons of knowledge available about investing on the internet and television, people may think that they can do it all by themselves. But, you need to realize the importance of a professional. Because a professional is closely associated with the market and is updated with the market trends. Their suggestions are backed by expertise and the clients’ needs. They can recommend what type of investments will best suit you.
One more mistake which people usually make is they copy others’ portfolios. They think the other person is earning X amount of returns by investing in X fund, so I should also do the same.
These kinds of mistakes should be avoided due to two main reasons.
First, if a fund has given X returns in the past, that does not guarantee the same returns will be earned in the future as well. The performance of the fund varies according to the market sentiments.
Second, every person has different needs and risk appetite. They may have the capability to bear high risk while you may or may not.
So, it is not wise to make your investment decisions based on someone else’s portfolio.
So, take professional help.
Investing, if done in the right manner, can give you a secured financial future.
Systematic management of money is very important for a secured financial future.
As investment consultants, we make sure to manage our clients’ money in a manner which brings both security and good returns while also fulfilling their major goals.
Some points to note when managing your money are:
- Know your current financial situation.
- Keep account of every penny spent.
- Set a clear financial goal.
- Take consistent steps to reach your goal.
- Review your investments from time to time and make changes, when necessary.
- Stay updated with the upcoming investment opportunities.
- It is important to invest according to your set goal.
The correct way to manage money is to follow the correct steps as follows:
Salary/ Income >> Save/ Invest >> Pay EMIs/ Bills >> Spend
Yes, small cap mutual funds can give good returns in the long term. But, it is always advised to keep your portfolio diversified to balance the market volatility.
Small Cap Funds are those which invest in all companies except the top 250 in terms of market capitalization. These are the companies whose market capitalization is less than Rs 5000 crores.
If we look at the history of returns of small cap funds for 5 Yrs, the returns range between 13% to 23% and sometimes even more. It is true that long term investment in mutual funds can beat volatility. But, in case of small cap funds, it is high risk-high return.
So, instead of investing all your money in small cap funds only, go for diversification. Include some large cap funds and some multi cap funds also.
If you want to accumulate a wealth of around 30 Lakhs for a long term period of 10 Years for your daughter’s marriage, the following should be your investment plan.
Investment in – Mutual Funds
Investment Type – SIP (Systematic Investment Plan)
Monthly Investment Amount – Rs15000
Duration – 10 Years
Expected Rate of Return – 12%
Expected Wealth in Year 2031 – Rs 34,85,000
Funds to be selected according to your Goal – Large Cap, Multi Cap Funds, Diversified Funds
The buying of stocks by the fund houses/ fund managers is governed by the instructions as per the mandate of the scheme. For example, if the mandate of the scheme mentions buying large cap funds, then the fund managers do as per the mandate. Flexibility is also exercised but within the regulations.
Also, every scheme lays down the proportionate share of large cap, mid cap, small cap etc. holdings in the scheme portfolio. Fund managers take due care of the percentage as well. For example, a particular scheme has 70% large cap investment, 20% mid & small cap, and remaining 10% as cash holdings.
The fund managers continuously monitor the performance of the stocks and make necessary changes (within regulations) whenever required.
Also, selection of stocks depends on the company’s policy. Some companies prefer growth stocks while some prefer sector based stocks.
Before giving the answer to this question, let’s first understand the three of them.
- Stock Market – Investing your money directly in stock market is quite risky because fluctuations happen every single second. Instant purchase and sale is possible in stock market. One requires careful understanding of the market before investing money.
- Mutual Funds – Mutual Funds is a actively managed investment. There are professional fund managers which take care of the funds and try to generate better returns while ensuring complete safety and security of funds.
- Index Funds – Index funds are a part of Mutual Funds. Investing in index funds means investing in Nifty and Sensex. Nifty consists of Top 50 companies while Sensex consists of Top 30 companies.
Choosing an investment option depends on many factors like
* Age of the investor
* Tenure of investment
* Risk appetite of the investor
* Goal of investment etc.
If one can take high risks, then investment can be made in direct Stock Market or Index Fund.
When risk taking capacity is moderate – high, mutual funds are preferred.
ETF and Mutual Funds may seem to be the same in nature but there are a few major differences between the two.
* Management – ETFs are passively managed while Mutual Funds are actively managed by professional fund managers who take care of various schemes to give good returns to the investors. While this is not the case for ETF
* Liquidity – In case of liquidity, ETFs are more liquid than Mutual Funds. Some mutual funds have a lock-in period or a penalty in case of early withdrawal.
* Purchase Process – ETFs can be purchased and sold just like stocks. They are directly purchased on actual prices which keeps on changing as per the market fluctuations. On the other hand, Mutual Funds are brought on closing NAV i.e, one gets the ownership of units at the time of market closing.
The ownership in case of an ETF is transferred instantly while in Mutual Funds first a purchase request is generated and then, the units are transferred at the closing rates.
* Tax Benefits – ETFs provide more tax benefits. But, in case of mutual funds also there are tax saving funds which have a lock-in period of 3 years.
When you want to invest for a long term to fulfill your financial goals, mutual funds are preferred to be the best as the investment is actively taken care of by professional fund managers.
Investing in Mutual Funds is quite easy. There are two ways in which you can invest – Direct or through Mutual Fund Advisor.
You can either invest directly with the AMC (like HDFC Mutual Fund, SBI Mutual Fund, Aditya Birla Mutual Funds etc.)
Or, find a good mutual fund advisor for you. An advisor having an expertise in the industry, can very well guide you as to which funds would suit you according to your goals.
Whenever an investment is to be made, unbiased expert advice becomes important.
If you are someone who is not a regular watcher of market activities or do not have the time to handle your investments, hiring an expert is the best decision you will ever make.
To invest in mutual funds, first you need to have a goal. According to your goal, you need to choose the best funds. You can have many goals at a time and create a balanced portfolio to achieve your goal. Your goal can be saving for your dream home/ car, tax saving, retirement planning, saving for your child’s education and many more.
And the best part is, you do not need to start big.
You can begin with a small amount starting from Rs500 monthly and gradually increase.
In that way, you do not need to wait to save more and can start today!!
Investing in direct stocks can be quite risky. But, even then if you want to have a stake in direct shares then, investing in shares via Mutual Funds can be the best option.
For example, if you want to invest in companies of a particular sector, then here are different sector mutual funds available in the market like Pharmaceutical Funds, Infrastructure Funds, Banking Sector Funds etc.
By investing in these sector funds, your money get invested directly in the companies under the specific sector category.
Also, when you invest in sector funds through SIP (Systematic Investment Plan) i.e, monthly, then you get advantage of investing in every up and down, which results in your returns being averaged out.
In this way, you can invest in stock with minimizing the risks involved.
Mutual Fund is a type of investment where a pool of people buy shares of multiple companies and be a part of the company’s profit and losses.
There are a number of Asset Management Companies (AMCs) which have many schemes of different nature like equity, debt, tax saving, fixed income etc where people can invest in, majorly two ways – Lump sum (Bulk amount invested in one time) or Systematic Investment Plan (SIP – small amounts of money invested every month)
When you invest in any scheme, you are indirectly buying the shares of multiple companies in which the scheme invests.
Let’s understand this with an example, if your goal is wealth creation and if you choose to invest in Aditya Birla Sun Life Frontline Equity fund, then your investment is getting diversified in all the companies included in the portfolio of Aditya Birla Sun Life Frontline Equity Fund like Infosys, HDFC Bank, State Bank of India, Tech Mahindra Ltd etc.
Also, the funds are managed by experienced Fund Managers so that you can get the best returns according to your investment goal.
Therefore, you can relax when you invest in Mutual Funds.
If you want more personalized advice, feel free to contact Financial Friend – The Most Trusted Financial Planner.
There are many factors which are taken into consideration before we can suggest the best investment options for you.
One such determinant is age of the person. For example, if your age is 25, for you the best ways of investing your money could be Equity Mutual Funds, Tax Saving Funds etc. If your age is 60 and above, Corporate FD will best suit you.
But, if you are looking for a list of options where you can park your money, then according to my industry experience over the years, I have listed the following investment options.
- Mutual Funds
- Corporate FD
- Gold Sovereign Bonds
- RBI Bonds
- Public Provident Fund
Early investing can help in creating good wealth with the power of compounding.
- If you are 23 years old and your monthly salary is Rs 30,000 and your expenses are 20,000 and you can save 10,000 every month.
- This savings for Rs 10,000 can be invested in mutual funds
- Mutual Funds are simple to invest in and have diversity in portfolio
- Don’t put all your eggs in one basket
- You can divide your 10,000 investment in different funds
- In your investment portfolio, you can include tax saving funds, equity funds for long term wealth creation, liquid funds for quick withdrawal in case of need etc
- Early investing definitely helps you in building a very good amount of corpus
- If you continue investing till you’re 50 years old, you can earn a corpus of more than 2 Cr (with an average interest rate of 12%)
Let your money grow. Keep Investing.
Markets have always been unpredictable. Where there is tension in the market 2022 seems to be a good opportunity to take advantage of competitive prices.
As far as wealth is concerned, building wealth is always a long term game. Investing in stocks with patience and a long term view will give good results. Investing in good stocks with proper technical expert knowledge is always helpful. Also, it is equally important to review your investment from time to time and take necessary corrective actions under expert guidance will definitely help in building wealth.
IPOs are a great opportunity to buy stocks at competitive prices. But, one cannot say that every IPO is a good investment option.
Generally, it is a perception that the stock prices will go up after purchase. But, taking expert advice is highly recommended.
In India, companies issue bonus shares and dividends to the shareholders which attracts them towards equity. Though equity is considered riskier, a long term view will result in wealth creation. And, it is always important to take a careful look at the company and it’s past performance before you invest.