Financial freedom doesn’t have a shorter path. It always comes through 3Ds (Determination, Dedication & Discipline).
One word barred from financial markets is instant gratification. It takes time and patience to attain maximum returns on your investments. Today, every investor seeks high returns, but only a few are willing to withstand the risk involved and the time required to get the desired results.
Keep in mind to begin early to gain optimal benefits. You need to be very particular while choosing the funds which can yield higher returns. Therefore, it is advisable to fragment your financial goals into three parts based on their timelines.
a. Long term
b. Medium Term
c. Short Term.
This division will help you anatomize all the available options based on your goals; then, you can choose the best one.
Also Read: How to Avoid Common Investing Mistakes
Here’s how you can invest towards attaining financial freedom early on:
One of the salient features of investment is that it helps you in saving & therefore, you should always begin with tax saving options. PPF, NPS, ELSS are a few options that can fetch you some tax benefits under section 80C. From an investment perspective, these funds can help you build heavy fortunes if you invest in them regularly for a longer period. So, these options serve both the purpose, one giving you tax benefits and other huge returns on your investment.
Last two years made everyone realize that your biggest wealth is your health. Therefore, primarily, you should always invest in insuring the health of yourselves & your dependents. Buy health insurance to avoid any incidental hole in your pocket; else, there is no need to tell you cruel some a medical bill can be. Health insurance not just helps you save money during any medical emergency, but it also aids you in getting tax benefits. According to 80D of IT Act 1961, you can get payable income deductions up to ₹ 1 Lakh p.a., and can save taxes up to ₹ 30k p.a.,
Never put all your eggs in one basket, a famous financial statement implying that you should never invest all your money in only one option. There was a time when people used to only invest in some lifelong policies or life insurance. It was maybe due to a lack of investment options or financial understanding. However, today you have thousands of funds to invest in and numerous sources giving you financial knowledge. Set your aims, select available options based on them and start investing. Always remember to make a diverse portfolio.
If your portfolio doesn’t have an emergency fund, then you must be ready for a big hole in your pocket. Today life is uncertain more than ever; therefore, it is vital to have an emergency fund. You cannot afford to always rely only on insurance. What if your home needs sudden interior changes or, what if you need to repair your car? You will have to do all these things by taking out your savings, which will hamper your financial budgeting. Therefore, make sure you build an emergency fund.
All you got to do is, set aside some percentage of your income every month. In just a few months, you will have a swelling purse of an emergency fund.
The only way to get good returns in lesser time is by investing in equity mutual funds or an equity-linked saving scheme, ELSS. However, remember its performance is entirely market dependent and therefore, you must be ready to bear the risk to get the higher return. Because, if expressed mathematically, higher returns are directly proportional to each higher risk.
Today retirement is no more dependent on your age; it now depends on your finances, and trust us, you can now retire at 50 and live your life king size. Investments are crucial to your prosperous future; starting it early on in your career will help you attain premature financial security.