Ka-ching! Ka-ching! Ka-ching! You are now the proud owner a million rupees!
Do you want a seven figure financial balance? It’s not as hard as you think. All you’ve got to be is smart about your money. There’s only one rule – Do NOT save.
Does that sound ridiculous? Saving helps you build wealth, right? Why shouldn’t you save?
Because saving alone does little for you. If building wealth is your priority, there are smarter ways you can go about it. Of the plethora of financial products at your disposal today, you earn higher returns on your money when you invest, rather than save, either in the bank or as cash under your pillow.
There are several avenues you can invest in, but if you’re a beginner or would rather someone else managed your funds for you, mutual funds are a great investment tool. Start a Systematic Investment Plan (SIP) in mutual funds to build wealth for your dreams. Not only will you benefit from professional management and potentially higher returns, you also enjoy the benefits of diversification, rupee-cost averaging and compounding.
Just make sure you avoid these mistakes when you invest:
Don’t delay investing
Time is your friend. The sooner your money is invested, the longer it benefits from compounding at potentially higher rates of return. This is because compounding helps you earn, not just on your investment, but on the earnings of your investment too. The sooner you start, the sooner you’ll be a millionaire.
Don’t follow the herd
There are thousands of mutual funds in the market and that gives you way too many options. The easiest thing to do is to invest where your friend is investing, or in the fund that has given the highest returns. But that’s not the wisest thing to do.
Why? Not all people are the same and neither are all mutual funds. What fund suits your friend’s risk profile may not suit yours, nor could the best performing fund be ideal for the risk you’re willing to take. It’s best to consult a financial advisor who will assess your financial picture, your goal, investment time-frame, and risk profile and suggest funds best suited for you.
Don’t give into fear or greed
Emotions are your biggest enemy when it comes to building wealth. Irrationality, triggered by fear and greed in particular, may lead you to take decisions that could hamper your progress on your way to your first million. Markets are a volatile place and while fear may tempt you to sell your investments or greed entice you to buy more, don’t pay heed to these. Base your decisions on sound research or advice from your financial advisor. This way, you’ll do what’s best for your money.
Don’t have unrealistic expectations
As a general rule, higher the risk, higher the expected return. This doesn’t mean you can expect returns that have never been seen before. Unrealistic expectations could cause you to misjudge how long you would need to invest to reach your goal, and this could not just be disappointing, but be the reason you miss out on something great. Your financial advisor can help you determine how long you need to reach your goal at realistic returns and make sure you’re on the right track.
Make that million sooner. Talk to your financial advisor and invest in mutual funds today.