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It’s been almost 9 years since I’ve been working and making my own moolah. At the beginning it was all very thrilling, earning money at 19 years old felt like the first steps towards independence. I’d be lying if I say that I was very vary of what I did with that money! It was frivolously spent on clothes, food and experiences, some of which I probably didn’t even need!Cut to almost a decade later, every penny spent, needs to go through several rounds of contemplation. Be it saving for a home, luxury items, planning travels or even just the future in general, I don’t think I spend a single penny frivolously anymore.
I recently read an article, which compared Gen X i.e our parents to Gen Y which is us, the millennials and their saving and spending patterns. Although there was a huge difference in the short term goals, the long term goals still remained the same. The short term goals for Gen Y were travel, gadgets and clothes where as Gen X considered all of those three as frivolous expenditures. But when it came to saving or being a property owner, the two generations seemed to be in perfect sync. The only difference being that the former would invest directly in property, Fixed deposits and Gold whereas the latter was open to experimenting and investing in mutual funds and systematic investments. I could totally relate to this because spending my income on travelling, new technology and lifestyle is the primary focus. But I did realise that to continue pursuing these goals, I would need to start systematically saving for the same!
My Dad was the happiest when I told him that I had decided to finally start investing my money, a couple of years ago! I suppose after years of preaching the importance of saving, he was probably just glad to know that his words actually went pass the ears! Although, when I mentioned that my first choice would be mutual funds, he was taken by surprise. His immediate suggestion was to invest any spare income straight into a property or in a Fixed deposit, but after I listed out the benefits of actually investing in Mutual funds, he was convinced! So what are the benefits of investing in mutual funds?
- Besides being an easy and quick way of investing, Mutual funds don’t require a large amount of capital. You can begin with an amount you’re comfortable with and add on as you go.
- Investing in stocks requires not only a constant flow of capital, but it also requires a lot of expertise. Because Mutual Funds are managed by professional fund managers who have the required experience, they make sure to get you the best risk adjusted returns.
- It gives you the option to choose a Growth option which gives you compounded interest or a Dividend option which ensure regular income from your investment, making it not only flexible but customised to your needs.
- Liquidity is another aspect which often gets over looked. Mutual funds let you convert your assets to cash as per your requirement.
So how do I make sure that I continue to save and securely invest my money without letting it affect my sanity or my lifestyle? I follow a few steps which help me do this with ease.
i. Every month I make sure to set aside a certain amount of my income for savings. I approximately try to save 25% of what I earn every year. Now this may seem like a lot if you look at the total amount but if you start on a month on month basis and save say Rs.15,000 a month, that would end up totalling to Rs.1,80,000 in a year! This way it won’t seem like a burden and you’ll infact end up making more off your money by investing it!
ii. I also try and set short term and long terms goals for myself so that I am motivated to keep saving. A vacation every 6 months comes with its own bills! I divide my savings into short term goals like say a handbag or a vacation and long term goals like a property or business. This way I am not neglecting either of them and am able to accomplish both.
iii. The way to accumulate wealth is not just by saving it! There were years where I thought that not spending my money and having it lay in my bank account was the only way of keeping that money intact. However, what I didn’t realise is that investing that same amount of money could make it grow even while I sleep! Which is why I consciously made sure that not only am I saving the money but I’m also investing it in the right avenues!
These steps have not only helped me grow my wealth and enabled me to accomplish my short term and long term goals, it’s given me the peace and sanity to keep focusing on my career and putting the money to appropriate use without an ounce of financial stress! We women multi-task constantly with managing our careers, homes and family so why not make sure that by investing in Mutual funds which allows us to not only grow our wealth but also takes out one of the jobs off our never ending to do lists and allows us to save for not just our families but ourselves! I’ve noticed that imbibing this habit has made be feel confident, financially secured and independent in it’s true sense.
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