Do you have dreams? Have you ever considered how much your dreams cost? There are a lot of things that we wish to own in the future, but they are not our goals at the moment. It can be a house, a car, an expensive bike, a world tour or something else.
From the money you will spend on marriage to the money you will spend on the education of your children, everything costs money. There are few goals almost everyone can foresee, however, other goals are contingent, especially on the availability of surplus money.
It is not wrong to have dreams that will be your goals someday even though you don’t see them as goals for now. However, if you want to dream big and be able to achieve them at some point in future, you can start investing something right away. Here’s how:
Understand the Flow of Income
When you are in your late 20s or early 30s and without any responsibilities, you tend to spend a lot on things that you may not even use. You do not worry about the inflow of the money and often use a credit card for parties and other activities.
All of us want greater wealth as life moves on. But this wealth accumulation needs a consistent and disciplined investment. Understanding your income and expenses will give you a better idea to ensure this consistency in your investments and achieve better results.
How much you are earning and where you are spending should be right in front of your eyes. First, keep 10% to 20% of your income for the rainy day. Then calculate what you can avoid and what all you can invest. If you need, you can take help of an investment expert in the beginning.
Save Enough to Meet Important Goals
Before you save for your future aspirations, you need to ensure you can look after your responsibilities. You can also revisit your goals and divert your investments to aspirations once the goal is met. Plan the investment accordingly.
With time your income may also increase, and you will have more money to put away as an investment. Improving lifestyle is a tempting option with every percent growth in income. However, financially wise people ensure that they are increasing their investments along with increasing income.
Choose the right instrument
Suppose you want to buy a bike or a car in say next 2 years. It is a short-term goal. For this, you should invest in debt. However, if you are planning to buy a house within the next 10 years, it will be a long-term goal.
For long-term goals, exposure to equity offers better benefits. But it is not necessary for you to start buying stocks directly. Remember that diversification plays and important role in securing your investments.
However, given the nominal amount of monthly investment, it will be difficult for you as an individual. You can select from various long-term investment plans in the market. Some of these plans which life insurers offer will also give you the benefit of tax savings.
It is important to diversify your investments under different risk buckets. Divide the money you want to invest in different instruments according to the risk involved or select a long-term investment plan that will do it for you.
Saving tax with investments is an extra perk. Make sure you choose the plans that can give you best possible returns as well as tax savings. Skilled tax planning would mean more money for you to save and invest for your financial goals. Through proper tax planning, you can ensure that you invest in instruments that not only aid in tax saving but are also conducive to overall wealth creation and your financial goals.
Automate your investments and savings
You may find it easier to invest a regular monthly amount, say Rs. 5000 per month or say Rs. 60,000 each year. Investing and saving through automated modes such as SIPs makes it effortless to save a fixed amount regularly.
SIPs are also more “consistent and disciplined”, two factors that play an important role in the defining the outcome of any investment.
This ongoing SIP system is not only great for budgeting, but as per experts, it makes for a great investment strategy too and helps meet both medium term as well as very long-term goals.
There are many aspects of life which require attention in your early years. You cannot simply leave it on time because they are not yet visible. Make sure to invest, even if only a little, from the very beginning. So that, you can think bigger and achieve more with your current income.