3 Smart Moves That Will Help Me Grow Richer This New Year

2017-rich

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.

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Why should you start investing at 16?

sixteen

Sixteen is the age of acne, agonies, heartbreaks . . . and dreams of abundant riches!

While most teenagers grow out of their acne and agonies of adolescence to attain higher education and subsequently decent jobs, only a few actually realize their dream of abundant riches.

At sixteen, nothing is beyond your aspirations from the future. From the bat-mobile, to a ranch in Texas, a Harley in the garage, and holidays in Paris – everything seems attainable.

Yes, everything is attainable, provided you let the wheels of fortune rolling into motion at sweet sixteen.

Of course, you do not have an income at sixteen. But you do have pocket money!

You can start investing in a mutual fund with as little as INR 500 each month.

While catching up the latest Marvel flick and hanging out with friends in the mall is being your age, assuring a future bestowed with huge wealth requires a little bit of financial discipline.

‘That’s the catch,’ you would say. Indeed, there has to be some ‘catch’ or if you may, ‘design’ to attain what 99% of your classmates will not be able to achieve!

Warren Buffet, one of the world’s richest men, bought his first three shares at age 11. By the time he graduated from college, he was not only financially independent, but had enough funds to invest in other businesses!

Think of your future wealth as a flourishing tree. Would there ever be a tree without sowing the seed?

You have to sow the seed to your tree of wealth.

And not just sow it; you need to water it continuously until it becomes strong enough to grow on its own.

This means that you must be consistent in investing, and as you start working, increase the amount invested per month to let the effects of compounding amplify.

Read on the following 3 compelling reasons to start investing at 16 (or maybe earlier!):

  • Earlier you start, the earlier you get rich: Compounding works wonders when you are invested for a long term in the market. While stock markets have proved to give an average return of over 16% over a period of 10+ years, by investing only INR 500 per month for 10 years at a lower than average return of 15%, you can accumulate over INR 140,000

 

  • Financial discipline at an early age: Investing regularly from a young age not only guarantees a huge corpus in future, it also teaches you to be frugal and spending within your means. Warren Buffett admonishes all spendthrifts by saying, “If you buy things you do not need, soon you will have to sell things you need.”

 

  • Financial Freedom at an early age: It is always good to know that you are financially secured and your little sapling is growing bigger with each passing day. This kind of financial freedom is unique to early investors, and provides them enough room to experiment with their choice of career and lead a better lifestyle. On the other hand, those who do not save early in their lives, slave hard for money while continuously struggling to meet huge expenses that come with life events such as moving to a new city, paying hefty deposits for accommodation, buying the first car, wedding, etc.

 

Great! But how would I know which mutual fund or share is best to invest in? How frequently should I switch funds? Should I calculate my returns on a monthly basis?

You have many questions, which is good. However, you may not need to answer each of these all by yourself. Professional wealth management experts and financial advisors can easily guide you to a time-tested stock or mutual fund. The key is to stay invested for a long time – at least over 10 years to reap the benefits of your investments. Don’t bother yourself about reviewing the fund over and over again. And do not get bogged down by market corrections (in fact, like Warren Buffett, you can buy more when the stocks get cheaper) as they are regular and necessary outcome of the stock market. Remember, if you have been able to find the right mentor or advisor, nothing can go wrong with your plans of getting unimaginably rich.

Investing your money at the right place from a young age can help you build a self-replenishing fountain of wealth. At Nave Marg, Dr. Celso, author of “Who says money doesn’t grow on trees?” dispenses simple unconventional advice to propel your journey to riches.

 

Pitfalls of the coveted Rental Income

rental-income

Scurrying to buy another piece of land? A popular investment strategy: Buy a house, see it appreciate and also earn rental income. Sounds perfect, doesn’t it?

In fact, owning multiple properties to create a regular stream of income may sound like a perfect retirement plan. But is it really so?

Having an empire of rental properties definitely has some advantages. One is, of course, the rental income. If your property is in a sought after area, it will earn for you throughout the year, serving as a constant stream of income.

Another advantage of holding a property is income from value growth. Ideally, when you buy a property you expect it to increase in value manifolds over the years. And if you are lucky, property appreciation is not a rare phenomenon to come by.

Another advantage of owning a property is high return on investment. For example, spending only a little on repainting the house, mowing the lawn or keeping it well maintained will return you significant amount of money through increased rental income and property appreciation.

But, as always, there’s an ugly side of the coin. Have you ever wondered about the pitfalls of the coveted rental income? There are quite a few.

No diversification of investments: If you hold a property portfolio, chances are it is your only investment. Thus, all your money is locked into a house in a specific place. If things go awry, you stand to lose a lot, maybe everything.

Meeting emergencies: In times of crisis, you cannot sell a kitchen or a bathroom, you will have to sell the entire house, and everyone knows distressed sellers hardly make a profit.

Unscrupulous tenants: There are good tenants, and bad, and circumstances often change. What if the tenants damage the property, don’t pay in time, or worst of all, decide not to vacate the house. Apart from loss of income, eviction costs may kick in apart from the hassle and time involved.

Managing finances: Landlords can have a hard time managing finances. Tenants will come and go, with or without notice. They may renew the lease, or may not. You may find new tenants or the house may stay vacant for months. There is no guaranteed stream of income that you can rely on for your fixed monthly expenditure. While rental income can add to your monthly incomings, it can never be the staple.

The solution?

The aim of this post is not to dissuade home buyers. The aim is to make them aware. Putting all your eggs in one basket is never a wise idea. Invest in property only if you can afford it, after you have built an emergency fund and some more liquid investments. Mostly people invest in property for making profit through land appreciation, however, over a longer period of time, mutual funds have shown far greater returns that can be cashed into in times of need.

You can start investing in mutual funds with as low as INR 1,000 through a Systematic Investment Plan. Discipline and patience while investing in mutual funds can help you build your wealth over the years successfully. Get in touch with Dr. Celso, author of “Who says money doesn’t grow on trees?” for simple unconventional advice to propel your journey to riches.