If your answer to above question is “NO” this blog will show you the path of being one and if your answer to above question is “YES” then for how long ?? Yes welcome to Stake Planum – your wealth partner, lets discuss this seriously and get yourself financially stable and independent.
If you have tons of money and it comes without any efforts to you then please do not read this blog as this is not for you!
Yes so, we all know that we work right from graduating or competing studies and constantly making efforts to earn and spend on things we like. But did we really thought that in the midst of daily hustle, how much time do we really devote to plan our Finances? Hardly any! and that’s were we need to think on seriously in this fast pace world. You never know what can come your way tomorrow which can change your life drastically – just look at this Corona Virus did we really expected this ?? obviously not.
Being Financial independent means to have enough resources to meet your expenses and spend on things you like and fulfil your future goals after considering all major events.
But just ask yourself, that earning fixed income every month from Salary or Business which at times barely sufficient to meet our basic requirements can take you to Financial Independence ? Can you grow your wealth by savings money ?? the answer will be No ..
But yes with better planning and follow-up actions and a bit of extra time on thinking we can build strong wealth and stable finance whether it may be personal or business.
The first thing is to stop delaying things and actually start doing, the more you delay the more opportunities you loose.
A smart approach would be to make sufficient savings and investments in early stages of our career. The regular source of income allows us to build a corpus of funds that is sufficient to take care of all our expenses. We can work towards goals like house, vehicle, education and marriage of children, and still, have sufficient corpus that will give us a regular stream of money to retire peacefully even before reaching to retirement.
This is not a pipe dream anymore. The financial ecosystem has changed so fast that a decade of judicious investment is all that you require to achieve financial independence. Following six steps mentioned below would help you move towards your financial independence.
Step 1
Save and invest
Start with saving part of your salary or business income by cutting your discretionary expenditures. This can be done by committing to invest at least a minimum of 30-35% of your income. The more you save now, the more your money compounds. The power of compounding should not be underestimated. If you invest Rs 1,000, compounding at 10 per cent per annum, you will have Rs 2,593 at the end of a decade and Rs 6,727 in two, Rs17,449 in three, Rs 45,259 in four, and Rs 1,17,390 in five decades. Just calculate the appreciation you will receive on 30-35 per cent of your income if you save religiously and invest intelligently!
Step 2
Include a healthy equity in your financial portfolio
Equity investments have rewarded investors by multiplying investments in a relatively short span compared with other investment avenues. If one starts early, plans properly and invests meticulously, one can endeavour to create sufficient wealth, helping him/her achieve financial freedom at a quite early age.
Step 3
Invest Systematically
If one is unable to commit lumpsum investments, systematic investments in equities would enable an investor to create wealth that can take care of his/her early retirement. SIP option has made it possible for investors to bring the much-needed discipline in their approach towards investment while making the magic of compounding work in their favour.
If you make a small SIP of Rs 1,000 per month in and equity mutual fund that offers about 12 per cent annual returns, you will have a corpus of Rs 35.3 lakh at the end 30 years! If one has a sufficiently good corpus to invest, post-retirement and needs regular income source, one can resort to investing in equities and plan systematic withdrawal. This would not only take care of his regular monthly need of the funds, but also keep growing at better rate than the so-called risk free instruments in the market that are usually used by senior citizens to park their hard-earned lifetime savings, simultaneously creating wealth for them.
Step 4
Identify your goals and plan them
Have different investment strategy for your goals (marriage, health, education), quantify them and set the time horizon for the same. You should do research and give enough time to make informed decisions, don’t follow a herd approach and invest time and effort to know about the fundamentals. Prepare your action plan for changing scenario and stick to it during the investment horizon. This will prevent you from making an impulse decision. Don’t be swayed by the exuberance or fear of the short-term aberrations. Do not panic when the markets are volatile if the investment horizon is long term.
Step 5
Try to Manage Risk
Have liquid funds to meet any emergency situation. Define you contingency fund requirements and work towards accumulating the same. The idea is your financial plans should not get hit by any contingency which anyone can face at any time of life, be it health issues, job loss, repair and renovation to your physical assets. Try to build a reserve which will sustain you for 6 months should you not receive any inflows in this duration.
Step 6
Be updated on your portfolio and review timely
Though short-term volatility is bound to happen, you should focus on the fundamentals of invested stocks. Once you have created an investment plan, keep it on track. Review your portfolio from the standpoint of the rationale that formed the basis of your investment. Don’t be too adamant just because you have put in time and effort for your previous research; keep that flexibility to amend your portfolio with changes in fundamentals. Remember overconfidence may be hazardous to your wealth.
So, I hope you liked above points to be financially independent. And you know what it does not cost much even if you consult financial planner, it is same as you timely consult doctors for body check-up, you keep your bike or car for servicing and do spend on doing parties. But unlike all this, Financial Planning will get you returns by which you can do more of that and it gives peace to your mind of being Financially Strong, Stable and Independent.
Stake Planum team is fully capable to take care of all your financial goals and can advice you on how to balance your finances and expenses. You can inquire for free – just go to contact section on the website and drop your details or call us anytime.
Thank You.
