13 important things to do for better financial stability and growth - FaqLabs

Friday, 23 February 2018

13 important things to do for better financial stability and growth

things to do for financial stability
Having a good financial stability is something everyone wants. But to have a financial stability we need to plan properly and start early. Starting early is the key many people fail to do and hence are caught up in instability. Financial planning importance is ignored by many individuals due to lack of knowledge but this should not happen and individuals should plan for long term. Need of financial planning is a very important thing specially for young married people.

As a young individual you need to take decisions and stick to them for long term. It is important to explore and identify best investments to make money for you in long term. Here are some steps than every individual should take so as to achieve a good financial status.

1. Buy a good health insurance
If you are a family man or even single make sure you have sufficient health insurance for you and your family members. Buying health insurance should be the first priority while making a financial planning. You can opt for health insurance plans for family.

Life insurance is one thing that most people neglect. Having a health insurance is utmost important because it is one such thing that can wipe out your savings completely. 

A medical emergency can occur at any time and will eat all your savings at once. Hence it is advisable to have sufficient health cover even before you allocate anything towards investments.

2. Buy term insurance
Term insurance is one thing that every married individual should have. The earlier you take it better it is. Make sure you have sufficient term cover before you allocate for investments. You need to choose the insurance company which has good settlement track record.Also choose the term plan considering various factors like inflation, time period etc.

3. Invest some part of your savings in gold
Gold is one such asset that has always delivered no matter what. Although most people think the returns of gold are lower as compared to other assets but gold price increase has been consistent and is also stable. 

There are no fears when you go for gold and also if you have future gold consumption plans like for example marriage then it is always good to for gold. You may want to allocate some percentage of your capacity in gold. You can keep this to minimum and having amount some invested in gold is always good.

4. Invest in Mutual funds for long term
Mutual funds have been doing good for last few years and it is a very good investment vehicle fr all. You can invest in different types of mutual funds depending on your risk appetite. If you are young then you can go for small cap or mid cap funds. People who have crossed 40 may opt for balanced funds and so on. Mutual funds investment for financial planning is a must these days.

Mutual fund returns are good but need time so make sure you remain invested for long term rather than short term. Remember there are mutual fund options that are high risk high return investments so depending on your age you need to decide your risk appetite.

5. Start mutual fund SIP at early age
Not Starting an mutual fund SIP is a mistake many people do. Make sure you start SIP's at early age. SIP gives a benefits of averaging and investing a small amount over a long period can turn into a huge corpus one day. Make sure you have different sip's for different plans.

6. Invest in Retirement plans
You need to make sure that you have enough of money for your retirement. A saving account will definitely not give you that amount. You need to plan for this at early age and its better to go for retirement plans available in the market. 

You need to make sure you allocate some portion of your monthly income into this. Also need to make sure you don't invest heavily in this as the money will be locked till you turn at least 60 so need to plan accordingly.

7. Don't invest heavily in fixed deposits
Fixed deposits used to be favourite during old times but are no longer attractive as there are better options available in the market. Hence make sure you keep this investment to minimum possible. 

Fixed deposits return rates have come down very much and many other option give more than double of this then why go for fixed deposits. It is only logical. You still can have some portion invested in fixed just for diversification.

8. Invest in ELSS mutual funds
Equity linked savings schemes are great option if you want to save on tax. ELSS helps you in saving tax hence it is a very good option and also returns in these are not bad hence if you have any thinking of doing investments for tax saving then it is a straight forward choice. 

You need to chose a well performing fund and go for it. The money invested here is locked down for at least 3 years so need to plan accordingly before starting the savings. You can also start SIP in ELSS.

9. Keep some cash handy all the time
Keeping money in savings accounts gives nothing but it is always advisable to keep some handy cash ready for emergencies or any other occasions you may need. SO allocate that percentage in saving account always.

10. Use credit card to the minimum
Credit cards are a great things for those who don't have cash and want t spend. Many people carry credits cards and end up spending more than there capability and hence go into financial instability. 

You need to make sure you use your credit card to minimum and responsibly. Having a credit is a great thing but using it without thinking could lend you in trouble so always be careful. Don't use the card as long as you have the cash with you. Or use it only to get the credit card benefits.

11. Don't invest everything in one single asset
Always make sure you diversify your investment in different assets and don't put everything in investment vehicle. remembers the saying "Don't put all your eggs in one single basket" for a single incident could break all your eggs at once. Go for diversification and allocate different percentages as per your risk capacity.

12. Let go if not performing
If any of your investments are not doing good and if there are not much hopes left in the future then it is always better to book losses and let go. You need to take tough decisions at times but it is okay to make mistakes some times. Make sure you do proper research before investing in any assets.

13 Don't buy loans because they are cheaper
Don't buy loans just because the interest rates are less. Go for loans only when absolutely needed and avoid them as far as possible. Also if you have no option but to go for loan then make sure you pay off the loans with maximum of 5 years plan and not more than that. Home loans will have different considerations all together though.

Conclusion : Everyone needs to understand the role of financial planning and should take the action at right time. advantages of financial planning includes it gives you more power, gives more control over your life and makes you stronger in life.

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