Investment - making money from money

“It’s not your salary that makes you rich, it’s your spending habits” but the question is how & where to spend/ invest. Through this blog I am explaining some basic guidelines for investment that will help you to secure future & help you in making money from money.

Step 1 - Life & Health Insurance: This is your first step of investment buy life & health insurance for yourself & your family members depended on you. Life insurance will help your depended in case of unfortunate circumstances. Many employers provide health insurance to their employees, if you employer doesn’t provide than buy health insurance for yourself & depended.

Step 2 – Secure retirement life: Once you cover yourself under health & life insurance than secure retirement life – invest into retirement plan. Retirement plan investment at early stage of your life helps you to get good return. You should consider inflated value of money at time of your retirement while choosing retirement plan.  

Step 3 – Step towards making money from money: You have secured life & future now take small steps towards making money from money. Invest into low risk & fixed return investment plan like fixed deposit (FD) & PPF (Public Provident Fund). 

Step 4 – Taking higher risk: Now it’s time to invest into higher risk & return products like Mutual fund, Bonds, Stock & Commodity Market. To enter the game of stock & commodity you need to invest some time to have some basic market knowledge & therefore it’s better to start with mutual funds than move to stock & commodity. There are many website & rating agencies which rate mutual funds on the basis of their past performances, study them for your reference. You should stay invested for medium to long term (at least 3 – 4 years) in these products to get good returns. 

Step 5 – Fixed Assets: Once you have secured life, future & getting fixed returns on our investment than invest in property & precious metals. 

Dos & Don’ts:

• Do not put all your eggs in one basket – Always follow this basic rule of investment 
• Do maintain cash savings – it’s very important to understand the objectives of your saving & how to invest it to achieve your goals. A separate cash saving account should always be maintained for immediate needs. 
• Do your research before investing – take an advice from others but do not follow the advice blindly, you should do your own study. 
• Do not invest in depreciating asset where cost of fund is high (like car loan)

These are the some basic guidelines for investment, I will cover each steps in detail in my subsequent blogs.