Gaining financial independence not only means earning a handsome income every month, but also means putting your money to good use. Saving a decent amount every month and investing smartly is the key to financial freedom. However, creating an investment folio does not only mean choosing available options such as mutual funds, Fixed Deposits or PPF.
It also involves calculation that will help you assess your risk appetite, your life goals and your financial capacity for investment. So, take a closer look at how you can treat your money well with a mix of long-term and short-term investment options and attain financial independence this August 15th!
Step 1: Start with basic money management
Check your bank accounts to list your monthly income and spending. When tracking your finances, dedicate a separate column for savings and investments done earlier. Experts recommend that you should invest at least 10% of your income every month. See if you have been doing this. Once you work out a budget, you will understand what you regular necessary expenditure is and what you spend on desires and luxuries. This will help you manage your money better and streamline your spending in line with your needs and goals.
Step 2: Make your money grow
Earning money and saving it is not enough. You mustalso find ways to make your funds grow over time. This Independence Day, take out some time to devise a strong investment plan that will assure growth for your money. Evaluate your income, age, and your risk-appetite to work out the perfect investment corpus that includes a mix of high return high-risk options such as shares and high-interest assured return options such as FDs, bonds, and PPFs. Do your research. Check whether a stock market investment will work better for you or will FDs give you higher returns for your unique needs. Invest the right amount based on your strategy to generate wealth and yield lucrative returns.
Step 3: Commit to balance your income-expense ratio
While you are trying out ways to manage and make your money grow, another important thing to do is to control your spending. Practice to reduce your expenses now, on your present income. This habit will help you save more when your income increases. It is essential to deduce a way in which you can curb unnecessary monthly expenses or luxury spends. You can do this by adding these expenditures on your wish list and fund them only when you have extra funds in your savings corpus.
Step 4: Compute a retirement plan
Do not neglect your retirement plans and include them in your present income-investment radar. Consider inflation when you are deciding how much you will need to save to maintain your present lifestyle post-retirement.A well-balanced portfolio with the right options will help build wealth and at the same time offer you funds for emergencies and difficult times. To create a retirement portfolio, you can choose several investment options such as Senior Citizen FDs, Post Office Monthly Income Schemes or Senior Citizens Savings Scheme.
Understand the terms of investment and return on each option before investing. This means that, for example, if you want to invest in FDs then compare various offerings and choose FDs on high interest rates such as the Bajaj Finance FD that gives you high returns up to 8.75%. You can use the FD calculator to decide on the amount you want invest and compute your earnings in advance.
Take a vow to follow these simple financial steps to restructure your income and investments. Start this Independence Day and make financial discipline a habit. In no time you’ll see your plan paying off in great returns!