Who doesn’t want to see their life goals materialized? Who doesn’t want to live life king-sized? We all do, don’t we? But is dreaming enough to reach where we want to? Will it keep us satisfied and happy for the rest of our lives?
TBH, it won’t! What’s mandatory is taking the right steps at the right time and investing from a young age.
Often, it’s seen that people enter the investing world in their mid-20s and 30s, and later complain about not being able to meet their goals. Their basic problem isn’t the amount invested, but the time at which they begin investing. If you’ve also been dreaming about investing but are confused about how and where to begin, here’re a few things you must be aware of.
#1 – How much to invest?
A common question that keeps bothering people is – how much they should invest. The general rule of thumb is – the more, the merrier!
However, before investing in any company, you should have a good amount of money in hand, and that can only be possible when you save enough from as early as you can. You should follow a pattern of 50:30:20.
Meaning you should use 50% of your earnings to fulfill your needs, 30% towards your desires, and the 20% left you should keep as savings.
#2 – Where to invest?
The world of finance is filled with many instruments, and sometimes it can be really mind-boggling as to which suits your needs. When in doubt, try looking at it from a bigger perspective and divide the instruments on the basis of Equity, Debt, and Alternative investment.
Investment in equities means putting money in stocks and mutual funds. Usually, it’s a bit tricky; but if you want to play on the safe side, you can either go for passive funds (index funds) or active funds.
As the name suggests, passive funds don’t require the mutual fund managers’ direct involvement. Here, the manager just has to put in indexes and get returns accordingly. Whereas in active funds, you have to be mindful of what’s going around you.
Debt mutual funds are best for people who have short-term goals. If you want to put in money for five years or less than that, you can select one or two debt funds and invest in them according to your risk appetite.
Alternative options consist of coin-currencies, gold, foreign stocks, REITs, and many more. As interesting as they sound, one should only invest in them if and when they have prior knowledge of their exchange.
To sum it up
Trusting that by now you might have gone through the points given above, we think from the next time onwards, you wouldn’t let your money sit idle in banks. Instead, you’ll make most of them and allow them to grow.