Do you just save? Saving alone does not add much to the value of money. To increase the amount of savings, it is necessary to invest. By investing money in the right investment options, you can accumulate a lot of wealth in the long term.
1. Source of Income You are currently doing job or business and you have a regular source of income. Do you know that after retirement you will have limited sources of income and your expenses will increase. The reason for this is that the risk of diseases is higher in older age. You have to spend more money on transportation etc.< ..
Choosing the right investment option helps you develop a source of income during old age.
2. Creating Wealth
Every person wants to become rich. People make small savings for future needs, but due to not knowing the right way of saving and investing, they do not become rich. If you maintain discipline in investing then you too can become a millionaire.
By investing regularly in Equity Mutual Funds, you can achieve your financial goals in the long run. Although the returns from mutual funds depend on the volatility of the stock market, but the investment made through SIP has been successful in giving good returns in the long term.
If you start investing from the age of 25, then investing only one lakh rupees annually will make you the owner of five crore rupees by the age of 60. For this, 12% annual return has been estimated. If there is a delay of 10 years in the investment, then to raise the same amount of wealth, you will have to invest Rs 3.5 lakh annually.
Financial Goals You should invest keeping in mind your financial goals. The most important thing is to estimate how much money you need for the financial goal. 10 years from now, 1 crore will not be as big as it is today. You should set your target keeping in mind inflation, purchasing power and needs.
So it is wise to do some multiplication before selecting the target. Today is very important for your future. Suppose today your son is going for higher education. Its cost is Rs 5 lakh.
Suppose your child will need higher education after 15 years. You have to know that after 15 years, how much amount will you need according to today’s 5 lakh rupees. What will be the inflation by that time? This is just one example of a financial goal.
If we consider the inflation rate to be 9 percent, then after 15 years the cost of that course will reach Rs 18.21 lakh instead of 5 lakh. To get the amount of your financial target, it is important that you take the real inflation figures.
4. Retirement Planning
Saving for retirement and investing it in options with best returns is essential. Reliance on EPF contribution alone for retirement plan is not right. After retirement, how much money you will need every month, first you have to calculate it.
You calculate the monthly expense based on the current value of the goods. Then, assuming annual inflation at the rate of 6 percent, increase it. This will give you an idea of the monthly expenditure that you will need after retirement.
Lastly, find out about the investment products you want to invest in. You can opt for equity mutual funds to raise funds for your retirement.
5. Financial independence
If you do not want to depend on your child or relatives for financial needs, then you should invest in options that give better returns. Even after becoming a senior citizen, if you can afford your necessary expenses from your own pocket, then this is financial freedom for you.
For this, you have to make such investments so that the amount you need keeps coming to you regularly and your capital is safe. For financial independence, you should start investing as soon as you start the job and do long-term planning.
6. Coping with inflation
if you choose the right investment options, even after a few years at the average rate of inflation, the money you need will continue to come in your hands and your capital will remain.
For example, in a better investment option, you can get returns up to 14-15% per annum in the long term. Even if for some reason the inflation rate remains 8-10 per cent in a year or two, your return on investment will continue to be higher than this. In fact, through such an option, you can continue with your expenses by ignoring the effect of inflation.
7. Advantage of compounding
that have a long-term If you invest in the growth plan of Mutual Fund , then you get the benefit of compounding. Suppose you invest Rs 10,000 and you get 8% return on it in the first year. Accordingly, the interest for the first year on your investment was Rs.800.
Now in the second year your investment amount becomes Rs 10,800. Even if you get only 8 percent return on this, then the amount of your return becomes Rs 864. Now in the third year your investment amount has become Rs 11,664.
Now if you get 10% return on this investment, then your annual return is Rs 1166. Accordingly, in the fourth year, your investment amount has become Rs 12,830. Now you will get annual interest/return on this.
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