Personal Finance, is the most important aspect of every Individual. Money, Finance and Investments are very important for the every Individual, whatever may be his income slab. I would like to share some useful tips about Personal Finance. So lets discuss in detail.
1.Start Investing Early:
Yes this is very important thing about Personal Finance. If you start investing from your early age, then definitely it is very good for you. Because in that case, you can create huge money tree, which will give you fruits at later stage of your life. Of course, even if you are little bit late, no problem. Start investing systematically from right now. Because I believe, it is never too late to start any good thing.
2.First Invest and Then Spend:
This is the most important advise by the famous Investment Guru Warren Buffet. Every Individual must invest certain amount amount of income and the remaining portion he/she should spend. But interestingly many people spend first and if remaining amount they invest. In fact even many the well educated, and well earning people do this mistake.
3.Diversify your investments – Important for Personal Finance:
Every wise investor never invests all his investments at one place. Never invest only in one investment instrument, or only in one deposit, or only in one asset or only in one stock, security or mutual fund. It is always better to spread your investment in rich variety of investment opportunities like, stocks, shares, mutual funds etc. The biggest advantage of this diversification of the risk.
4.Do Not Run Away from Equities:
This is the most important suggestion to the readers of this blog from me as Finance Blogger. In India even today many people are reluctant to invest in equities. They think that their money will be lost in stock market. If you do not have adequate knowledge and experience about investing in stock market, then please do not invest in stock market directly. But you can definitely access the equity market through Equity Oriented Mutual Funds. Please check my article 10 Reasons to Invest in Mutual Funds. Remember, in this new era, only the returns on equities can help you to beat inflation.
5.Optimum Combination of Equities and Debt:
Being Prudent Investor, we should have optimum balance of equities and debt in our portfolio. As discussed earlier we must diversify our Investment Portfolio. Balancing of Equity and Debts, help us to optimize returns on Investment.
6.Never Use any Credit Card:
Credit Card is the biggest barrier in successful Personal Finance. Credit Card is addictive and there are many examples of getting trapped into debt through Credit Cards. It does not serve any good investment or finance purpose. Please check – 4 Reasons to Avoid Credit Card.
7.Set Your Personal Finance Goals:
It is very important to set the goals in life. Of course this applies even in Personal Finance. So suppose you have goal to purchase home at the age of 27, then you can start investing in the way and manner so that you can get proper finance at that age to achieve the goal of purchasing the home. This is just an example. There would be different goals in life like Children Education, Travel, Starting your own business and so on. So if someone invests in such a way to achieve different goals, then definitely he will be successful.
8.Take Calculated Risks:
Many Investors are extremely risk averse. They hesitate to take risks. Interestingly no investment is 100% safe except the money in your own pocket. There is credit risk, there is market risk, there is interest rate risk. In fact the money in your own pocket can also be stolen. So no investment is risk free. Of course it does not mean we should invest anywhere. But we should learn to take calculated risks to optimize our returns on investment.
9.Ensure that You are adequately Insured:
Insurance is one of the important aspect of Personal Finance. Every Individual must secure the future of the persons who are financially dependent on him. Ensure that you are adequately insured. Please check my article Are You Really Insured
10.Review Your Portfolio in Regular Intervals:
Only good investing is not adequate. It is very important to monitor and review investments in regular intervals. And it is good practice to liquidate investments which are not giving expected returns, and to invest in new investment avenues depending upon the market conditions.
These are the some of the important aspects of Personal Finance. I hope this article helps in your journey to be rich. Wish Goddess Lakshmi bless you with Prosperity!