Vijaibabu's Blog - Personal Finance Guide for Financial Freedom

It didn’t need much deliberation for me to choose the title of this article; straight from the gut, if you’d like to call it.  Before I proceed, let’s get one thing clear. We are not talking of getting rich through a lottery or inheriting huge wealth here. We are talking of:  Simple investing practices that delay gratification so that you and your family may enjoy it to the fullest later Having your financial goals fulfilled comfortably Retiring in comfort, and  Taking dream vacations without having to count every penny  When we choose conservative investment options, become apprehensive about investing more in a superior yielding asset class (example equities), dread losing money, and fear far too much about ending up poor, we are simply denying ourselves a chance to become rich.  Here are some of the common fears we have about investing in a seemingly ‘risky’ asset class such as equity, along with reasons on why your fears may not be justified: I am afraid I’ll lose money in

Discuss finances jointly It's important for both partners to be on the same page when it comes to money matters. One needs to keep the other informed about insurance policies, mutual funds and other investments. Ensure you assign your spouse as nominee in all investments. Avoid splurging With two incomes and enough disposable money, one might be tempted to buy the latest gadget or upgrade to a bigger car, but do not be impulsive. Buy only what you actually need and can afford. Buy a car that fits your budget. Your car loan EMI should not exceed 10% of your monthly net take home pay. Ensure that you have made your savings before you spend your salary Don't ignore retirement It's easy to lose track of retirement planning when you are young. Put away at least 10% of your income for retirement savings. Go for equity funds because you have time on your side. The ultra cautious can go for the PPF, though the returns will not be spectacular Set up an emergency fund Always b

F irst income always brings in a sense of joy and freedom. This joy is shared most of the times by buying gifts for near and dear ones. Beyond that it becomes a routine spending affair. In the current days of flourishing e-commerce it is very easy to empty the wallets on everything that you need and want! It is the wisdom of the ages that anything in excess is not good. So neither too much spending nor too much saving is going to get you in your happy space eventually. A balance needs to be arrived between the two. For most youngsters this can be a daunting task. A simple mantra is to adopt an ‘Earn-Save-Spend’ habit , as against the easier and tempting ‘Earn-Spend-Save’ habit. Be disciplined to save at least 10% of what is earned. This can increase depending on personal circumstances. For a 22 year old earning Rs.20,000 a month this amounts to a saving of Rs.2,000 a month. This saving invested in an instrument giving about 12% return will grow to Rs.1.84 crore by the time he