Once in your life, You thought about investing and growing your hard-earned money, and for that Of course, you have searched for the options of investing.
If you have done that before, Then You definitely heard about SIP (Systematic Investment Plan) as safe and good long-term returns from the stock market.
But the question is — Can SIP make you really rich?
Everyone is ready to tell you(by using SIP Calculator) how you can make a lot of money by investing very little amount every month and that too for a long period of time (which can be 10–40 years).
You are saving money every month without enjoying in present and hoping to become rich in 20–30 years by investing in SIP.
Investing is a very good thing but, You have to be healthy as well to enjoy your returns on investment.
Most people literally get lost in work to earn more money and spend their whole life working. they don’t even hesitate to ignore health for money.
Does that money really make sense to you?
what will you do with that money if your health doesn’t let you enjoy old age? Sadly, You have to spend a hefty amount from that return on your hospital bills(maybe more than that).
Isn’t it better to focus on health, Stay happy, and enjoy the present with your loved ones. after that If you are left with money you can invest in the right place. So that you can keep enjoying life Tension-free.
Back to the SIP — Don’t worry if you are not able to invest a lot of money. Here are a few tips which can help you to make decisions easily.
1.Consistency is the Key :
You just make sure that you are investing Consistently. Because most people can’t even do that.
You should discipline yourself for investing every month (The amount Doesn’t Matter).
And of course, don’t compromise with health and family needs for investment.
2. Increase Amount Gradually(Go Step-by-Step) :
Now it’s more than 2 years and you are investing a little from your income every single month consistently.
Congrats !! 1st Milestone achieved!
It’s time to Level up your investing game plan a little bit.
Here onwards Just Increase your investment amount by only 10% every year.
I am Assuming that You get a hike of an average of 10% every year and you use the 50–30–20 rule in your life.
You can easily increase your SIP amount by 10% after every 12 months.
If you don’t know about the 50–30–20 Rule. I have already explained this in another article thoroughly.
3. Don’t take a loan to Invest :
You might be thinking what silly advice is this, But many people make this mistake and end up paying the debt till retirement.
Paying the SIP amount consistently is good but don’t take a Loan to pay the amount. (That is why the SIP amount should be convenient for you according to income)
Even though Mutual Funds give better returns in the long term. But no one can guarantee what exact returns they will give. Mutual fund risks are related to the Stock Market. So, don’t take returns as guaranteed. Returns can be quite different from what you calculated before investing. It can be more or less.
4. Don’t put all eggs in one basket :
If you are willing to invest 20000 per month. Divide the amount equally into min. 4 parts (5000 each)and diversify your portfolio. It can be mutual funds, Stocks Gold, REITs, Bonds, etc.
A diversifying portfolio gives you risk-free good returns in the long term.
5. Emergency Fund is MUST :
Before you start investing, Make sure you have an emergency fund aside. In case you got stuck in a financial crisis, you lost your job, your business suffered from losses, or any family member or you got hospitalized, etc.
Life is unpredictable anything can happen. you should be prepared for everything. You should have an emergency fund that can cover your all expenses for min. 6 months.
If you want a more stable life, you can increase your emergency fund to 12 months or more as per your requirements.
Keep your Emergency fund in the Bank so that, you can withdraw it at any time. Even if you are getting more returns than Inflation Growth.
That’s great!
If you want to generate more returns from your emergency fund…You Can! But Before making any decision Remember, Don’t Invest your emergency fund from where you can’t cash immediately.
You have an Emergency Fund, You started Investing, You have a Diversified Portfolio, You Investing Consistently, You are growing your Investment by 10% every year, You are getting good returns on your investments(12–15% Annually), and top of all this things You are happily living Healthy lifestyle with your loved ones.
What else do you want from life? —
If you follow all the above rules with discipline, You are the happiest and Richest person on the planet.
Are you ready to apply these rules in your life?
Let me know through Likes and If you have any questions…The Comment Section is just for you!
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Happy Investing..!