The nation is welcoming the 74th Independence Day and today we exist in a free country which allows us Independence and liberty to do everything. But winning the struggle isn't that straightforward when it comes to financial independence. To lead a comfortable life later it may require sacrificing some of your luxuries today. It may take quite a while for you to save and accrue the capital necessary to be financially independent. And your assets will sometimes see spikes and falls. It's really necessary to hold yourself calm and responsive to the disruptions and stay focused on 'Financial Freedom'.
You must have a diverse portfolio of investments along the same lines - diversified throughout asset classes namely the equity, debt, gold and further diversified within the asset class among investment strategies. Before doing any asset allocation, it is vitally necessary to recognize the return and risk of each asset class and product. Here we have prepared a financial plan to achieve your financial freedom which not only enables you to meet your financial goals but also ensure long-term financial well-being.
1. Evaluate your financial goals
Evaluate the desires of freedom, and determine the cost in fulfilling them. Implementing short, mid, and long term financial objectives is an essential step towards becoming financially stable. Annual financial plan delivers you with an opportunity to evaluate your strategies regularly, adjust them and analyze your achievements from last year. Start by recognizing how much you want to accomplish, and when you want to, this will not only allow you to live peacefully and independently but also lessen your money troubles.
2. Complement your savings with your financial objectives
It is appropriate to allocate your investment surplus to various asset groups, bearing in mind your age, earnings & expenditures, assets & liabilities, risk tolerance, investment goals, and kinship to the horizon of financial objectives. Investments should be rendered optimally in this manner thus minimizing the risk associated in order to generate returns.
Rather than investing in an irregular sense and/or in the effort to save tax during the budgetary year by finding investment avenues under section 80C of the Income Tax Act, 1961, this will deliver a straightforward path for your investment. Set your goals for the long term, and invest accordingly. For instance, if you plan to live a delightful retirement, first assess how much you need to save monthly. Since retirement could be a long way ahead, to benefit from the influence of capital appreciation, it is wise to start saving as quickly as possible.
3. Pick the right assets
The next move is to determine an investment range that involves tax-saving opportunities as well as options for achieving the highest value objectives of life. So, don't pursue the top-performing mutual fund schemes, prefer the investing paths that will support your investment portfolio and secure your financial freedom. Identify suitable investment avenues based on the suitable asset allocation for you and the investment horizon for your strategic objectives. If you have a long-term investing period of 5-10 years or more, equity is the best option to maintain a higher allocation.
4. Save and Invest Regularly
The creation of wealth is a lengthy process. Don't be pulled in by the fashion of standardized products, the current mutual fund or the latest stock in which your buddy has invested. Stay to the savings strategy and you'll be congratulating yourself one at a time, to achieve massive capital. It is extremely important to save money as it gives you financial freedom, widens the decision-making options that have a significant impact on your lifestyle and ultimately gives you the retirement benefit. A wealthy citizen achieves financial independence by maintaining diligent work, savings and investment strategies.
5. Start SIP
If you can not undertake lump sum investments, comprehensive investment in equity allows you to generate wealth which will take care of your early investment. SIP facility enables an individual to spend a fixed amount of money in the chosen mutual fund scheme at predefined intervals. When you have a fairly strong portfolio to invest in, post-retirement and require a regular source of income, you can switch to investing in equity. Through SIP, you do need to worry about market dynamics, just start investing a minimum of Rs.500 per month and welcome the long-term benefit, stable wealth, early retirement benefit to your lifestyle.