Investment Tips for Beginners




Unfortunately, personal finance has not yet become a required subject in high school or college, so you
might be fairly clueless about how to manage your money when you're out in the real world for the first
time; same like me. If you think that understanding personal finance is way above your head, though, you're wrong.  

All it takes to get started on the right path is the willingness to do a little reading - you don't even need to be particularly good at math.

To help you get started, I have researched some articles & listed eight of the most important things to understand about money if you want to live a comfortable and prosperous life.


  1.  Learn Self Control

If you're lucky, your parents taught you this skill when you were a kid. If not, keep in mind that the sooner you learn the fine art of delaying gratification, the sooner you'll find it easy to keep your finances in order.
The best way to execute Self Control while buying luxury items  is ask just one question to yourself and answer it genuinely; and the question is Is any thing wrong happens, If I don't buy this thing ? Is it really essential ? If your answer is yes, just buy that thing otherwise no , big big NO.

2 Avoid Credit Card Shopping

Although you can effortlessly purchase an item on credit the minute you want it, it's better to wait until you've actually saved up the money. Do you really want to pay interest on a pair of jeans or a costly sunglasses?
If you make a habit of putting all your purchases on credit cards, regardless of whether you can pay your
bill in full at the end of the month, you might still be paying for those items in 10 years. If you want to keep your credit cards for the convenience factor or the rewards they offer, make sure to always pay your balance in full when the bill arrives, and don't carry more cards than you can keep track of.

How would you like to earn 18% return immediately? Pay off those credit card bills and other high interest
loans you may have. By paying them off, you eliminate the high interest charges that you incur (As high as
18% on many major credit cards).

2. Take Control of Your Own Financial Future
If you don't learn to manage your own money, other people will find ways to (mis)manage it for you. Some
of these people may be ill-intentioned, like unscrupulous commission-based financial planners. Instead of relying on others for advice, take charge and read a few basic books on personal finance. Once you're armed with personal finance knowledge, don't let anyone catch you off guard - whether it's a significant other that slowly siphons your bank account or friends who want you to go out and blow tons of money with them every weekend. Understanding how money works is the first step toward making your money work for you.

3.Know Where Your Money Goes

Once you've gone through a few personal finance books, you'll realize how important it is to make sure your
expenses aren't exceeding your income. The best way to do this is by budgeting. Write down each & every transaction you are doing in your pocket diary or you can have many smartphone apps to track your daily expenses on the go. Have a habit of it & you will have a answer of your innocent question I don't know where my salary goes ?

You'll realize that making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a raise. In addition, keeping your recurring monthly expenses as low as possible will also save you big bucks over time. If you don't waste your money on a posh apartment now, you might be able to afford a nice condo or a house before you know it.


4. Start an Emergency Fund

One of personal finance's  mantras is "pay yourself first". No matter how much you owe in student loans or credit card debt and no matter how low your salary may seem, it's wise to find some amount - any amount - of money in your budget to save in an emergency fund every month.Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly "expense", pretty soon you'll have more than just emergency money saved up: you'll have retirement money, vacation money and even money for a home down payment.

Many peoples are confused on percent of income you should keep aside for Emergency fund, there is no any hard & fast rule for it but it is good practice to put 10% of your income in Emergency Fund. It is advisable to open a RD of this amount to make sure you put your money regularly. 

5. Start Saving for Retirement Now


You need to prepare for your retirement well in advance. Because of the way compound interest works, the sooner you start saving, the less principal you'll have to invest to end up with the amount you need to retire, and the sooner you'll be able to call working an "option" rather than a "necessity".

I'm sure many of you have heard this before and seems like simple advice.However, to understand the importance of this point. Consider a goal of accumulating 10 Lakhs  by age 65 and that you are able to earn 8% return per year. According to mutual fund company calculation, if you start investing at  45 years old, you will have to sock away some 21,900 a year. However, if you begin investing at age 25, you'll need to make an annual investment of just 3,900. That's a big price to pay for procrastinating.

Company-sponsored retirement plans are a particularly great choice because you get to put in pretax dollars
and the contribution limits tend to be high (much more than you can contribute to an individual retirement plan). Also, companies will often match part of your contribution, which is like getting free money.

6. Get a Grip on Taxes

It's important to understand how income taxes work even before you get your first paycheck. When a company offers you a starting salary, you need to know how to calculate whether that salary will give you
enough money after taxes to meet your financial goals and obligations. Fortunately, there are plenty of
online calculators that have taken the dirty work out of determining your own payroll taxes. These calculators will show you your gross pay, how much goes to taxes and how much you'll be left with, which is also known as net, or in-hand salary.

Just follow one rule "Earn as much as possible & pay taxes as less as you can". Invest your money in PPF, Government Bonds or Tax saving bonds to reduce your taxes.


7. Guard Your Health
If meeting monthly health insurance premiums seems impossible, what will you do if you have to go to the
emergency room, where a single visit for a minor injury like a broken bone can cost thousands of
rupees ? If you're uninsured, don't wait another day to apply for health insurance; it's easier than you think. You can save money by getting quotes from different insurance providers to find the lowest rates.

Also, by taking daily steps now to keep yourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, not smoking, not consuming alcohol in excess, and even driving defensively, you'll thank yourself down the road when you aren't paying exorbitant medical bills.


8. Don't Confuse Saving with Investing.

I am sure many of you are intent on saving for a house, a car, higher education or something else. By all means, continue saving, but don't invest your savings in stocks and stock mutual funds if you plan to make a large purchase within the next four to five years. Remember, investing will work wonders for you, if and only if, you put time on your side. Time periods of less than five years may not give you enough time to recover from a substantial market drop.

Before I wrap this up and let you get on your way, I want to remind you A Financial Basis for Life. Remember, you don't need any fancy degrees or special background to become an expert at managing your finances. If you use these eight financial rules for your life, you can be as personally prosperous as the guy with the hard-won MBA.


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