Personal Investments Strategy Tips | FinCalC

There are so many free resources available on Internet, books written, articles by famous authors on Personal Finance with different Investment Strategies, but what's the point after having that knowledge and not implementing from your end? There are so many people who procrastinate when it comes to Personal Finance and delay this important topic to act on.

May be because they find it complicated. May be they are not interested in Personal Finance topic and feel that they have enough time to act on it in future. But they are wrong. It's not that complicated. And they need to act on it right now to enjoy Financial Independence and early retirement.

"You gain maximum benefit of Compounding interest only when you start early. It's a small building block every month that stacks up to form a tall building."

So here are some Personal Investment strategies you can follow:

1. Avoid Savings Account

Keeping cash in your Savings Account isn't a great strategy in Personal Finance. Inflation can eat up all the interest gained in a financial year.

"Don't be excited about the small interest gained in Savings Account. Inflation eats up all your interest credited."

Most of the times, interest rates provided by Savings Account is less compared to the Inflation rate. Inflation will probably eat all your free money you received as interest for your deposits.

2. Have an Emergency Fund

The first thing you should do after getting your initial pay cheques is to create an emergency fund.

"Emergency Fund is a fund which covers at least 6 months of your expenses that can be used in extreme cases."

So have an emergency fund in the first place. It will help you in covering your basic expenses in case you are searching for a new job. It will also help in case of extreme health emergencies.

Consider a liquid fund in order to create your emergency fund. Liquid funds have higher interest rates compared to Savings Account and are also easily accessible.

3. Take Risks when you are Young

After you have required amount in your emergency fund, it is time to take some risks and invest your money in equities. Consider investing in mutual funds if you are a beginner.

There are plenty of mutual funds to choose from in different categories. Choose the one with low risks and average returns. It's time to let your money work for you. 

"If you don't know how to let Money work for you, you will work for Money throughout your life."

The money that you will be using after creating your emergency fund is your Working Capital. This can be used to buy more Assets that will help you generate more income.

4. Buy Assets. Avoid Liabilities

Buying something? There are few questions you should ask yourself before buying.

• Will this product have any value in your life?
• Is this product an Asset or a Liability?
• If it is a Liability, is it really needed?

If the product you are going to buy isn't that necessary, you can delay buying and wait for 30 days. See if it is really needed after 30 days. If not then probably you should not buy it.

"Less is more. Most of the items we possess aren't really needed. We can stay without them. They simply occupy space and takes away some extra cash from you."

Differentiate products based on whether it's a need or a want. Avoid your wants as they will be less important for you after few days of use.

"Assets are something that puts Money in your pocket. Liabilities will take out Money from your pocket. Buy Assets. Throw Liabilities."

Understand what are your Assets and Liabilities. It's very important.

5. Three Important Investment Rules

Last but not the least, here are the 3 important rules to have Financial Stability in life:

• Don't lose money:

Don't make losses while investing in equities. Never redeem in case you are in lose, have patience. You will surely make profits.

• Have an Emergency Fund:

Emergency fund is important to secure your working capital in case of extreme scenarios.

• Always say 'YES' to free cash (like 401k plan):

Maximize your contribution towards 401k plan so that your employer matches your contribution. It's free cash.
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