Experts suggest that putting your money to work as soon as possible is critical to achieving your objectives. The amount of money is important, but it comes second to the act of investing. Assume you want to build a corpus for your child’s education over a 15-year period, but you only have Rs 5,000 in investible surplus. If a study program costs Rs 14 lakh now, it would cost Rs 33.55 lakh in 15 years. If you assume a 12% rate of return, you should begin saving Rs 7,500 a month right away.
Due to the sheer power of compounding, the sooner you start saving for retirement, the more money you may make. It’s never too late to start, though.
Let’s take a look at five tips to assist you to increase your savings and accomplish your financial corpus goals:
Plan your Future Needs
Use a retirement calculator, an online tool that provides you with a quick estimate of how much money you’ll need in retirement. It can also assist in the detection of surpluses and gaps. To use an online investment calculator, simply enter your current yearly income, frequency, current retirement savings, current age, and planned retirement age to get a rough estimate of your retirement income. If you want to create a customized financial plan for your retirement, visiting a financial adviser might be quite beneficial.
Start today
You do not have to begin investing Rs 7,500 right now. Even if you start with a lot smaller amount today, you will be able to accomplish your goal. The objective is to increase your investment outflows as time goes on. You may put more money into investments when your financial condition improves and your savings begin to rise.
Make your savings/investments automatic
The adage “pay yourself first” is certainly familiar to you. This entails setting aside money for yourself at the beginning of each month when you receive your paycheck. When saving for a deposit, consider a Systematic Investment Plan [SIP] with mutual funds. A SDP is a method of investing that automatically deducts money from your savings account and invests it in the fund of your choice. It helps you to develop your savings without having to be concerned about it.
Increase your investments as your savings allow
The important thing is to keep your money invested and hike your investments as your finances allow. Even if your corpus is insufficient when your goal is due, you will still be better off than if you put off investing completely or wait until you have “enough” to invest.
Find new sources of revenue
Look beyond tax-saving and find new sources of income. Look for a portfolio that can supply you with a steady source of income. Choose the right financial advisor in helping you see where you stand in your current financial planning.
Final Thoughts
These strategies will help you build your financial corpus over time. Remember that, small investors should invest in mutual funds using systematic investment plans (SIPs), which allow them to contribute as little as Rs 500-Rs 1,000 per month while maintaining a high level of liquidity. Investors may take advantage of the step-up SIP option, which allows them to increase their investment amount by a set amount over time.
Choosing a direct mutual fund plan can help you get more value for your money, but you must be cautious when selecting funds. Because the expenditure ratio for these plans is substantially lower than for conventional plans, the returns are higher as well, allowing you to develop a larger corpus over a longer period of time.
Apart from this, Indians can also explore investing in international stocks, which may help to diversify a broader portfolio and alleviate concerns about currency depreciation for everyone.