How you deal with surplus cash determines your future. When you don’t have a plan, you are likely to overspend. This money could have been used to make you financially self-sufficient.
How you deal with surplus cash determines your future. When you don’t have a plan, you are likely to overspend. This money could have been used to make you financially self-sufficient.
In the backdrop of inflation, everything is going to be costlier with each passing year. If you don’t invest, your money won’t grow to bridge the inflation gap. Otherwise, you might not be able to retire as you would want to.
Investing can be a great way to channelize the extra cash and counter inflation. It can be used to grow wealth and divert it to goal accomplishment. The earlier you start investing, the better. Investing can be a bridge between where you are and where you want to be.
Start with identifying goals like buying a car or planning for retirement. Categorise those goals into short-term and long-term. Goals that can be achieved within 1 to 3 years are essentially short-term. Goals that need a horizon of 3-5 years are called medium-term goals. Goals that require more than 5 years to achieve our long-term goals.
Identify your risk appetite i.e. the degree to which you are comfortable with a fall in the value of your investments. If you can digest, say a 20% fall in the value of investments, you are a high-risk seeker. Else, categorise yourself as a risk-averse investor.
Once you identify your goals and risk appetite, you can conveniently select the investment haven. A risk-seeker may go for a diversified equity fund. Conversely, a risk-averse short-term investor may go to a liquid fund or a balanced fund.
Mutual funds have come up as the most versatile investment haven. You can start Systematic Investment Plan (SIP) at a nominal sum of Rs 500 per month. Under SIP, a fixed amount gets deducted from your savings account and is invested in mutual fund scheme of your choice.
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