Financial Wisdom – ‘Money often costs too much’.

It is significant to be financially literate to meet all the desired goals in life.

To begin with, one has to do an assessment of ‘reality’ versus ‘augmented reality’. This can be easily plotted over a simple ‘goal sheet’ by doing self-introspection. Early you begin, maximum benefits you reap.

Two of the applied components of the ‘goal sheet’ are ‘Savings’ and ‘Investments’. It is quiet easy to decipher the correlation between these two terms and when you begin to put them through the matrix matching them to your individual objectives & goals, that’s the end of all the financial worries.

What is Savings: Let’s put this here as ‘Compulsive Savings’. It is taking away all unnecessary expenditure & excluding all unwarranted outgoings from our monthly spending and putting them into a bucket called ‘Savings’. Avoidable spending has become an obsession. So this starts with little things like saving on electricity, water and all metered expenditures. One could also try using shared transportation to workplace.

Act wisely on lifestyle inflation like buying a bigger car & getting enticed by ‘discount & deals’. Credit card spending are a financial trap if you keep spending and make only partial settlements to the account.

Now that you have Savings, you need to prudently park them as Investments.

What is Investments: By definition it is ‘the action or process of investing money for profits’. This doesn’t mean big or large involvement of money; but could be small, though disciplined investment activity.  

So how do we me make profits. ‘You cannot work for 24 hours a day, but your money should.’ That’s the power of ‘compounding’. Albert Einstein famously stated: ‘Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.’  

Invest sensibly for your money to grow. What are my options: Take guidance from a fiducius investment advisor. Draw a ‘Financial Plan’ for your immediate, short term, long term & retirement goals. Integrate your investments with these financial objectives and goals.

Mind these as you Invest:

Do a professional ‘Financial & Goal Planning’. Don’t trust the online templates, they are fictitious. Seek a professional assistance.

Stay away from Ponzi schemes that promise high returns in short span. Do not get desirous for quick money. Invest judiciously.

Diversification is the key. Do not put all your eggs in one basket. Design a portfolio of Debt & Equity based on your financial plan.

Insurance is not an investment. Our lives have to be adequately insured. The insurance amount takes care of our loved ones when we are gone.

Take an adequate Medical Insurance Plan for the whole family.

Keep contingency fund. Allocate a little every month to this fund & keep it pretty much liquid, so that you could withdraw them even at late hours.

This is what Warren Buffet; one of the most successful investors of all times has to say on Investments:

“Rule Number 1: Never lose money.

Rule Number 2: Never forget Rule Number 1”