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Top 10 investment tips for 2020

26 Nov 2019

It is the month of November and in less than 40 days, we will be bidding goodbye to 2019. As we usher in a New Year, most of us have already made their New Year plans. Surely, you have made your New Year resolutions too. Let 2020, the 20th year of the new millennium, be the time for making a smart and savvy investment foray. But investment is not just about parking money in investments. It is an iterative process where investment must be preceded by a solid plan. SIP mutual funds and mutual fund investments must be on your agenda in 2020, but it is more important to get the framework right. Here is how!

10 smart money resolutions for year 2020

Before you jump into investing, ensure that you have the building blocks in place. For example, there is no point in earning 15% on an equity fund if you going to pay 35% interest on your credit or 20% on your personal loan. Here is how to go about it.

  1. Start your journey with proper documentation. Starting off by organising your insurance policies, your existing investments, bank accounts and credit cards. You might have more than you can actually handle. As the first step, resolve to cut down on the plethora of cards, bank accounts and policies and make them manageable.

  2. Next you must reduce your high cost debt. Prioritise debt reduction over other allocations in 2020. Ideally, use your year-end bonus to reduce a part of high cost debt like credit cards, personal loans etc. What you save is what you earn!

  3. Do a zero based analysis of insurance needs. In other words, start from scratch. How about thinking ahead by 10 years and envisaging the changes to your insurance needs? Make substantial increases in your term cover this year itself. Focus on low cost term covers because insurance is not an investment. That is what mutual fund investments and SIP mutual funds are meant for.

  4. Go as digital as possible and reduce dependence on cash. Cash has a huge cost and can be erratic. Ensure that all bills from milk bills to grocery bill are paid digitally. Digital payments keep a central record and you can just download the statement for analysis.

  5. If you don’t already have a financial plan, embark on it. It is never too early or too late. Get to grips with your finances and you will realize that many of your dreams are actually a lot more achievable than you originally thought. Write them down!

  6. You have to force the discipline of saving and investing. Look at savings as a target rather than a residual. Prepare and stick to the budget. You will realise that you actually have a lot more investable surplus than you thought. Don’t let money idle in a savings account. Liquid funds can do the job a lot better.

  7. Focus on wealth creation; that is what ultimately matters. Only wealth creation gets you closer to your goals. Debt can give you security but cannot generate wealth. For wealth creation focus on the power of equities and equity mutual funds. In fact, equity funds via the SIP route help in compounding returns consistently year after year.

  8. Make your money work a little harder. Invest according to your risk tolerance? At 25, you should not be putting money only in debt funds. See if you can increase your monthly SIP contribution as the cumulative effect can be phenomenal. Your earnings will support you up to a point. After that, make money work harder.

  9. This may sound dull and prosaic, but can make a big difference to your investing capacity. So, plug leakages in your budget. You may be spending more on eating out than on nutritious home food. You may be taking a cab when a metro can be more economical and efficient. Cutting flabby expenses can be a remarkable move towards being a wealth multiplier.

  10. Have a back-up plan in place. You don’t have to always expect the worst but have a contingency plan. This will ensure you are not caught on the wrong foot if the stock markets were to correct by 30% or if interest rates were to trend lower.

Year 2020 must be the time for your next big step to invest and be secure!

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Top 10 investment tips for 2020

26 Nov 2019

It is the month of November and in less than 40 days, we will be bidding goodbye to 2019. As we usher in a New Year, most of us have already made their New Year plans. Surely, you have made your New Year resolutions too. Let 2020, the 20th year of the new millennium, be the time for making a smart and savvy investment foray. But investment is not just about parking money in investments. It is an iterative process where investment must be preceded by a solid plan. SIP mutual funds and mutual fund investments must be on your agenda in 2020, but it is more important to get the framework right. Here is how!

10 smart money resolutions for year 2020

Before you jump into investing, ensure that you have the building blocks in place. For example, there is no point in earning 15% on an equity fund if you going to pay 35% interest on your credit or 20% on your personal loan. Here is how to go about it.

  1. Start your journey with proper documentation. Starting off by organising your insurance policies, your existing investments, bank accounts and credit cards. You might have more than you can actually handle. As the first step, resolve to cut down on the plethora of cards, bank accounts and policies and make them manageable.

  2. Next you must reduce your high cost debt. Prioritise debt reduction over other allocations in 2020. Ideally, use your year-end bonus to reduce a part of high cost debt like credit cards, personal loans etc. What you save is what you earn!

  3. Do a zero based analysis of insurance needs. In other words, start from scratch. How about thinking ahead by 10 years and envisaging the changes to your insurance needs? Make substantial increases in your term cover this year itself. Focus on low cost term covers because insurance is not an investment. That is what mutual fund investments and SIP mutual funds are meant for.

  4. Go as digital as possible and reduce dependence on cash. Cash has a huge cost and can be erratic. Ensure that all bills from milk bills to grocery bill are paid digitally. Digital payments keep a central record and you can just download the statement for analysis.

  5. If you don’t already have a financial plan, embark on it. It is never too early or too late. Get to grips with your finances and you will realize that many of your dreams are actually a lot more achievable than you originally thought. Write them down!

  6. You have to force the discipline of saving and investing. Look at savings as a target rather than a residual. Prepare and stick to the budget. You will realise that you actually have a lot more investable surplus than you thought. Don’t let money idle in a savings account. Liquid funds can do the job a lot better.

  7. Focus on wealth creation; that is what ultimately matters. Only wealth creation gets you closer to your goals. Debt can give you security but cannot generate wealth. For wealth creation focus on the power of equities and equity mutual funds. In fact, equity funds via the SIP route help in compounding returns consistently year after year.

  8. Make your money work a little harder. Invest according to your risk tolerance? At 25, you should not be putting money only in debt funds. See if you can increase your monthly SIP contribution as the cumulative effect can be phenomenal. Your earnings will support you up to a point. After that, make money work harder.

  9. This may sound dull and prosaic, but can make a big difference to your investing capacity. So, plug leakages in your budget. You may be spending more on eating out than on nutritious home food. You may be taking a cab when a metro can be more economical and efficient. Cutting flabby expenses can be a remarkable move towards being a wealth multiplier.

  10. Have a back-up plan in place. You don’t have to always expect the worst but have a contingency plan. This will ensure you are not caught on the wrong foot if the stock markets were to correct by 30% or if interest rates were to trend lower.

Year 2020 must be the time for your next big step to invest and be secure!