Today’s youngsters are very alert and knowledgeable. As soon as s/he stands on their own feet they start thinking of investing for their better future. Many questions and complexities of thought run through their mind. Should I start investing now? from where should I start? How to invest? Where to invest? Whose guidance should I take? They have many such questions in their minds.
Young guys remember that, even if your salary is low and you can save less early in the job, start your investment process. This early start will stand you ahead of the crowd in the future. We all know the story of the rabbit and the turtle. Slow but steady always wins the race. A well-thought-out continuous and steady investments can create wealth in the long run.
I am hereby sharing you some Dos and Don’ts of investing process which will definitely lead to a well crafted and successful investment journey.
# Invest in yourself. Upgrade your knowledge each day with continuous learning.
# If required go for higher studies or pursue a part-time PG degree/ Professional course. Higher Education and degrees will always help you throughout your life.
# Start investing in your life financial goals from your first paycheque.
# Identify your life’s financial goals and divide those into short, medium, and long term goals. This exercise at yearly days of your earning will build your investment paradise firmly.
# Try to save the maximum. Fix your saving rate >50% at least.
# Have a track of your monthly expenses. Be aware of your lifestyle expenses.
# Don’t fall into the trap of maintaining lifestyle expenditure vicious circle. Spend wisely. Understand what are your Needs and what are your Wants.
# Mind it, today’s sacrifice done on unwanted desires will lead to early Financial Freedom.
# Start investing at least 20% of your saving towards your retirement goal from your first paycheque.
# Open your VPF/PPF account or both if income permits and try to contribute to the maximum. Real compounding magic can be experienced in EPF, VPF, and PPF if funded rigorously with discipline for the long term
# Follow 70:30 Equity and Debt ratio. If you are conservative by nature you can follow a 60:40 ratio.
# If you want to go for an old tax regime, for 80 C tax benefits consider only EPF, PPF, and ELSS. Don,t purchase Ulips or any other traditional insurance policies for tax benefit.
# Start investing in Mutual Funds. Start with Index (Nifty) Fund. Start your SIP from the first few months of your earning, after getting the required knowledge about mutual fund and equity asset class.
# After a year of investing in Mutual Funds, start investing in Nifty next 50 index fund. Invest in the ratio of 65:35 of your equity investment in the Nifty Index Fund and Nifty Next 50 index fund.
# While investing in mutual funds try to learn direct equity. Learn what is technical analysis and fundamental analysis, learn to read profit and loss, and balance sheets of companies and AGM minutes. Gather as much possible knowledge about the Direct Equity Investment process.
# After detailed knowledge about the equity stocks, you can invest a small amount in the blue chip stocks.
# Start serving your education loan if any, from the first month of earning.
# Set aside your emergency fund. Yes, it is required for a young guy like you too.
# Refrain from buying a house at a very early stage in career and committing yourself to huge EMI. First, have some base of liquid financial assets by your side then start thinking of physical assets.
# Do not blindly follow the investment advice of your friends, colleagues, or relatives. Things that worked for them may not work the same way for you. Make a customized financial plan for yourself as per your risk profile, investment style, and requirement.
# Do not hesitate to take help from the Registered Investment Advisor. The early you start investing under the expert guidance the better for you as it will help you to save from the common mistakes an average investor does in initial years of investing.
# Never get into the debt trap. Please never take any expensive loans to fulfill your aspiration. The debt will hamper your saving.
# Never invest in any Ponzi scheme for any extra return. Choose only those financial products which are authorized and legal..
# Maintain an excel sheet of all your investments for future reference.
# Maintain your physical as well as mental health regularly. A fit body and a happy mind can only lead to wealth creation
Youngsters in their 20s may find all these points mentioned here may be very early to implement. It is really difficult to make the young generation of millennials understand the importance of the above points. In my opinion, we have to provide insights about personal finance to our young siblings, children, friends, or cousins from time to time. Elders can give examples of others who did mistakes in their 20s and missed out on the compounding factor benefits and now struggling with finances. We just can try hard for ourselves as well as for our loved ones to get these pointers implemented.