Making investment is an integral part of one’s life because the entire future and financial well being will only depends on how you invest your money. This blog post will typically discuss top 10 best tips to invest money. I am sure after reading this you will definitely get better insight about managing money efficiently.
You may wonder, why such tips. Since these are the basic tips to invest money. Investing money is no rocket science if one stay focused and follow the basics of investing.
Table of Contents
1.Contingency Plan
Whether we invest money or not but safety is a must. Therefore one should always keep a separate emergency or contingency fund, so that in case of any contingencies such as job loss, accident, taking care of an ill person in the family can be met.
The better learning from COVID 19 times, we should always keep at least 6 to 12 months expenses in a separate fund.
Although,one can always withdraw from other investments or savings but it may lead to losses, in terms of reduced interest rate, penalties or more.
Read more about contingency fund
2. Diversify your Investments
It is always said, not to keep all eggs in one basket. Since all markets/investment have different risk factors involved into it hence it is always suggested to invest in different classes depending on goals and requirements
3. Rule 50:30:20
Consider Basic investment principles such as the 50:30:20 rule. As per this rule spend 50% of your earnings on your daily needs, 30% on your wants and rest 20% for investment.
4.Set smart financial goals
It is a wise decision to set smart financial goals because if you know your goals then you can decide the investment duration – small, mid or long term and accordingly you can take risk on your investments
.Read more about goals
5.Do Not mix insurance and investment
People buy insurance plans for both investment and insurance purposes. It is in your own benefit to not buy insurance policy for investment purposes. One should buy a term plan for insurance purposes and make investment in different avenues as per your goals and risk appetite.
6.Invest Regularly
Stay consistent with your Investments and invest regularly. It is always in your interest to increase your investment periodically so that you can reach your goals easily and faster.
To start a SIP Please read the post.
Read more about it how to reach your goals faster
7.Don’t invest in something that you don’t understand
It’s better to enhance your financial knowledge so that you can understand the products better and understand how one product works.
8.Don’t touch your retirement savings
Don’t touch your retirement savings until there is an emergency. Since you might get a loan for everything except your retirement.
9.Taxation – An important thing to consider
Before taking an investment decision it is always best to consider taxation at maturity.
Before purchase,it’s best to know how an investment product is taxed since taxation can wipe out a great amount of profits. Thus making it a low performing investment for you.
10.Consult a Financial Planner
Consult a Financial Planner. It is in your best interest to consult a financial planner because a financial planner is a qualified professional who can judge your risk and your requirements and make a complete comprehensive financial plan for you so that you can get the best from your money.
For additional Reading
