Life is short. You don’t have much time to attain your financial goals. Planning is a must for you to achieve your financial goals. If you fail to plan then you are planning to fail. These 4 steps might just lead you to a better financial future.
Start saving your hard earned money
You work very hard to earn your money. Do you want it to flow down the drain? If not, you better start saving your money. Money comes and money goes. How would you benefit if no money remains with you?
You must save money for an emergency. Emergencies strike when you are least prepared. Medical emergencies can empty your pocket in no time. A natural calamity like the recent floods in Chennai can leave you completely broke. You need to set aside money for at least 3 months of living expenses. If you are married you need to set aside money for at least 6 months of living expenses.
Avail a loan wisely
There is a famous saying by Ogden Nash. “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.”
You must be very careful while availing a loan. If you are availing a personal loan which is called an emergency loan, then you better make sure it is an emergency. If you avail a personal loan to go on a foreign trip or buy a costly electronic gadget, then you are making a serious mistake. Personal loans charge a very high rate of interest. You might struggle making the repayments. This is a bad loan for you.
If you have to avail a loan, make sure it is a good loan. Avail a home loan which not only gives you a roof over your head, but also can earn you rental income in the future.
Invest for your financial goals
Your financial goals may be short term, medium term or long term. You must invest your money wisely to get to these goals. If you want to go on a foreign trip a year from now, this is a short term goal. Buying a car about 3 years from now. This is a medium term goal. Planning for your retirement about 10-15 years from now. This is a long term goal.
You must invest in fixed income instruments to achieve your short and medium term goals. While investing in fixed deposit is generally followed, you must also consider investing your money in debt funds. You can invest your money in debt mutual funds or even fixed maturity plans to meet your short and medium term goals. Fixed maturity plans have a fixed lock in period of 3 years. They also have a portion of your money invested in equity. You must invest in fixed maturity plans only when you are sure of your financial goals.
For your long term goals invest in equity such as equity mutual funds and shares. This investment easily beats inflation in the long term.
Diversify… Diversify… Diversify….
You must have heard the famous saying Don’t Put All Your Eggs In One Basket. If the basket falls, all the eggs are broken. Investing money across different financial assets is called diversification.
You must diversify your investments. Invest some of your money in gold. Some of your money in equity. Some of your money in fixed income. Some of your money in real estate. This is the diversification benefit. Stock markets may crash, but gold and real estate prices may rise. Your money is safe.
So follow these 4 steps and enjoy a bright financial future.
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