04/01/2017
Manage your money that can help you get rich faster in 2017.
By now, you must have made your financial resolution for the New Year. But wealth accumulation often takes a little bit more than just planning.
Going by the books, the right asset mix is considered the main foundation for wealth creation. So, if you are dreaming of accumulating wealth over time, you should opt for proper financial planning and go for a mix of equities and debt instruments.
Financial planners suggest eight key steps to financial planning and wealth creation in the Indian context, given the current equilibrium in the economy at the very start of Calendar Year 2017.
Equity exposure: Since the gradual opening up of the capital markets in the 1980s and big-bang moves of the early 1990s, many investors have been left out of the ambit of the equity market, which has gone on multiplying wealth over time. The domestic stock market has delivered returns that beat inflation and multiplied savings.
Equity-linked savings schemes (ELSS) of mutual funds are another investment option that is actually EEE (exempt-exempt-exempt) from income-tax perspective. Let the magic of equities purchased at a huge effective discount because of the tax saved make you rich.
Tax planning: Many of the tax-saving options available have the advantage, which may not be coincidental, of turning into truly awesome options. "Exempt-exempt-exempt (EEE) investments in the public provident funds (PPF) can actually generate returns that can be double the returns generated by a taxable investment.
Break away from the past: Just a couple of generations ago, there were limited common investment options available. A few with knowledge, access and exposure to the capital markets invested in equity or corporate bonds.
Proper budgeting: Make a New Year resolution that you will keep an eye on your monthly income and expenditure. Let the first item on the budget be investment. Pay yourself for your future. According to market experts, one should set aside at least 30 per cent of your take home pay towards this. Increase it gradually by spending a little less on non-essentials. And never spend more than you earn.
Don't let your money lie idle: Many individuals keep their money in savings accounts or in cash, which hardly does anything to beat inflation. The challenge is to get returns above inflation and turn saving into investments.
Think before investing: Portfolio management schemes, lucrative stock recommendations and close-ended mutual funds look sophisticated and exotic. Sometimes an investor believes these instruments can help generate superior returns over time.
Start saving through SIPs: SIP is more of a saving tool, than an investment. It can help inculcate the habit of regular saving by automatically deducting a predetermined amount from your bank account at a pre-set date and investing it in a mutual fund scheme. An SIP amount can be as low as Rs 1,000 a month (Rs 500 in case of ELSS funds), and even small retail investors can start investing early and benefit from the power of compounding.
SIPs also do away with the need or effort to time the market and reduce the cost of investment by getting more units during market dips and crashes .
The key to successful investing lies in taking Fundamental Investment calls, while making the best of Tactical Opportunities. Should you like to leverage this opportunity.
You may send an email with your details to [email protected] or [email protected] and our expert team will get in-touch with you to choose the best stocks & MF's to Invest.
