One of the most important factors to
consider while drawing a financial plan is fixing the time period,
especially if you are a beginner. The thumb rule is, the earlier you
start, the greater the chance of achieving your financial goals.
Everyone has some goals and
responsibility in life, some want to buy a new car and some are planning
to retire rich so that they can enjoy their post-retirement life. We
all have many dreams, but are we really investing that much time and
money on building the corpus to achieve these goals. It is time tested
that if one starts investing early, the percentage of building the
corpus for one’s desired future financial goals is higher as compared to
those who start very late in their life.
Investing according to financial goals.
Identify and priorities goals:
The first step in goal based investing
is identifying and prioritising goals by segregating them into needs and
wants – needs are essentials and hence get precedence over wants, which
are desires and aspirations. Once decided, align your needs/wants to
the time horizon.
Holding Duration
As a young investor one should know the
holding duration of any MF categories (for e.g., liquid funds, debt
funds, equity funds, hybrid funds, etc.) while investing their money in
mutual funds against any financial goal.
Explore the systematic method of investing in mutual funds
Investors can also benefit from the
systematic plans offered by the mutual funds. For instance, a
systematic-investment plan (SIP) is used for wealth accumulation. A
systematic-transfer plan (STP) helps in transferring wealth from one
asset to another, in safeguarding the portfolio against volatility, and
in adapting to the changing risk appetite with age and increase in
responsibilities. Lastly, a systematic-withdrawal plan (SWP) is useful
in deriving a regular income from the created wealth created.
Power of Compounding
Young investors have an advantage in
investing since the longer you stay in the market, the less risky your
investment becomes and the more corpus you can generate over a period of
time. This happens because of the compounding effect and the rupee cost
averaging benefit you get over a long term.
Once you are done with prioritizing your
financial goals of life, quantify them, that how much amount you may
need to achieve those goals and based on that choose mutual fund
schemes. So give wings to your dreams and start investing in something
each month to achieve your goals without any burden of heavy debt on
your shoulder.
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