New Year is round the corner and while you are flooded with wishes of health and prosperity in 2017, take a minute to stop and think – how can you make these wishes come true?
The answer may sound like a cliché, but it is the only one – discipline.
A disciplined lifestyle can restore your health and make you agile; financial discipline on the other hand, will help you grow prosperous and attain financial freedom.
While you wind up that alarm clock and don your tracks and sneakers to embrace health; we tell you three smart ways of getting prosperous this New Year:
Raise your monthly investments to 25% of your income
Financial experts across the globe stress that before paying anyone out of your income, you must pay yourself. The first step in disciplining your finances is to match your monthly investments up to one-fourth of your income. As per a study done by Technopak, merely 5% of the income is being saved or invested by Indian households in the year 2013; and with the growing consumerism in the country, this average will hardly have a chance to swell up. Only a few wise people invest a quarter of their income – hence, it is unsurprising that only a fraction of people enjoy increasing wealth in the country.
To add to this point, if you have wealth creation on your mind, your methods have to be more pragmatic than traditional. Remember, traditional deposit options, although the safest bet, will earn you hardly anything over a period of time (current interest rates, after adjusting inflation, may even give negative results). To grow rich, mutual funds are a smart option as they have proved to give healthy returns in long investment periods. SIPs (Systematic Investment Plans) are the best option to invest in mutual funds as you can part with small amount of money each month and expect a healthy corpus in a long term (ideally 10 or more years).
Monitor and limit your expenses
“If you buy things you don’t need, you will soon sell things you need,” this insight from one of the world’s richest persons and a successful investor, Warren Buffett, is not considered as a golden rule of financial management for nothing. There is precious wisdom in these words.
Thanks to the lustre of high fashion brands, gadgets, and decor items among other products that are bombed at us by e-commerce giants in form of irresistible mega sales that seem hard to miss, keeping a check on your spending is much more important now than ever. Even a brief online shopping trip can leave you down by at least couple of thousand bucks. Add to this the convenience of paying later offered by credit cards, you may actually end up spending way more than your earning.
One of the smart things that rich people strictly follow is to track their expenditures. While the New Year brings new opportunities to increase your income (appraisals and bonuses), there will be new avenues of expenses, too. Being a little cautious about spending unnecessarily will surely help you grow rich.
Add a new revenue stream
It may seem like an outrageous suggestion to many who believe there is simply no time in their busy lives to spare for a second job – conventional wisdom and ample evidence proves that people having multiple source of income accumulate wealth at a much faster rate than those with single income. Financially disciplined people having more than one source of income regularly invest their surplus money for a longer duration of time, and since they do not rely on the invested surplus to meet their expenses, their investments are rarely withdrawn – helping the corpus grow larger and larger with each passing day.
Explore your hidden talents – give lectures and advisory if you are a subject matter expert, write food blogs and bake sumptuous cakes for friends and family if you have enviable gourmet skills, or simply invest little sum in a small promising venture if you are super busy and can’t think of starting something on your own.
Remember, the magic of compounding works only if you; a) invest regularly; and b) stay invested for a long time (over 10 years); it works wonders if you; c) keep increasing, albeit moderately, the amount of investment from time to time.
The key to riches is in your hands! Open the door leading to the path of riches, and simply take small, yet regular steps towards the garden of fortune.
As the New Year knocks at your door, turn it into an opportunity to grow rich by setting a financial goal, pump up your investments, weed out unwanted expenses, and find additional avenues to add new revenue streams.
Above all, get in touch with a professional financial advisor who can vet your financial goals and dispense right investment advice.
Nave Marg, represented by Goa’s own financial doctor, Dr. Celso Fernandes; author of “Who says money doesn’t grow on trees”, has been on a mission to educate and inform people about the importance of investing, helping them set financial goals, and letting them realise the merits of investing from an early age.