The past one year has been a blur. Looking back, we are unable to derive a conclusion on how our experience has been. Not just in the financial markets but in almost all spheres of our lives, the pandemic hit us all. From unemployment to plunging economy, we really went through some horrid times.
It’s almost been a year and now we seem to have normalized the current situation. Markets, companies and people are slowly finding their stride to regain the lost momentum. Here are 6 massive money moves which will trailblaze you towards attaining financial grounding for your future endeavours.
If 2020 didn’t ring a bell in you to save, we seriously recommend you to get serious about it. The pandemic has taught us the importance of saving, of having back-up money when needed the most. Ideally, the 50-30-20 rule should be practiced where 50% of your income goes for household expenses,
30% of it goes to leisure & entertainment and 20% of it is put in savings. Savings are important to secure your financial future and it cultivates a positive financial behavior too
Depending upon a single stream of income makes it all the more difficult to achieve our financial dream. Curating another mode of income while not working entirely is the dream which we all envision. What if we said that you can make it come true?
Passive income means generating money with no correlation to your time. A few examples of passive income are – real estate rentals, dividends, interest income, monthly payout from financial investments, etc.
Passive income relieves us from stress, anxiety and worry
Passive income gives you the freedom of time
It allows you to pursue doing the things you love rather than what pays the bills
A lot more free time and luxury to work from anywhere
Investments help you build a large corpus over the years which secures your life after ‘work’. Savings is a sensible starting point in investing because it provides the funds you need to purchase a range of different assets.
However investing goes one step further, helping you achieve personal goals with three significant benefits.
Power of compounding
Money invested today yields higher returns of profit over a predetermined period of time. The other benefit of investments is that it acts as a tax-reduction tool. The earlier we start investing, the higher rate of returns over the years.
The above point talks about how investments help an individual to attain financial freedom. Diversified portfolio means investing in various tools which reap more rewards and minimizes losses. It is okay to put all your eggs in one basket but with that comes the risk of losing out on extra returns. This is where a diversified portfolio helps, considering the movement of the market,
a diversified portfolio will help distribute financial risks across different instruments and different industries to maintain a balance
An emergency fund helps meet unforeseen financial demands or loss of income arising from unemployment, illness or disabilities. Without an adequate emergency fund in place, unforeseen financial emergencies can force you to default on existing loan repayment obligations, redeem investments kept aside for crucial financial goals, or sacrifice important lifestyle expenses and/or avail loans at much higher interest rates.
The most important benefit of having an emergency fund is PEACE OF MIND. It’s said that money can’t buy you happiness, but that depends on your definition of happiness. If happiness means peace of mind, money certainly is a factor. Having a solid emergency fund can give you peace of mind by reassuring you that you can manage unforeseen expenses.
We are an Ahmedabad-based investment and financial advisory firm helping individuals, families and businesses in effectively and efficiently managing their finances, investment and further growing their wealth.