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Introduce savings into your routine

Introduce savings into your routine

Health and wealth are interrelated in more than one way. While making exercise a part of your routine can improve your health, saving and investing regularly can build your wealth.

Here are two easy things you can do today to start your journey to financial well being.

Put aside a fixed amount: People who struggle with their finances often complain that they can never seem to save anything to invest in the first place. This is because they have always been waiting for money to be leftover after they have made their expenditures. It is a common mistake that a lot of us make. A good idea can be to simply set up an automatic bank transfer to an investment just after you receive your salary or income. You can use your bank’s net banking service to do it yourself or you can go to your bank’s branch and leave instructions with them. This would ensure that as soon as you get paid, your investments are made... even before you have a chance to spend that money.

Introduce savings into your routine

Where to invest: If you are uncomfortable with complicated financial investments and do not really understand how a lot of them work, you should definitely consider a Systematic Investment Plan (SIP) in a suitable mutual fund. There are mutual fund schemes that suit all sorts of investors with different risk profiles.

Why choose a mutual fund?

Mutual funds are managed investments. This means that qualified and professional fund managers oversee the funds that you invest. If you were to manage your funds yourself, you would need a substantial knowledge of the equity and debt markets to make the right decisions. If you are a complete novice, you should always opt for managed financial products. Mutual funds invest across a wide range of asset classes. You can use your favourite mutual fund to invest in stocks, bonds, commodities or even other mutual funds!

What are the advantages of a mutual fund SIP?

Mutual fund SIPs allow you to invest as little as Rs. 1,000 per month automatically into mutual funds. If you have just begun to save and you are not sure how much you can spare for savings each month, just start with one SIP and keep adding SIPs as you grow comfortable. Just like splitting your exercise into smaller manageable bits, you can do the same for your investments as well. SIPs also allow you to build a corpus over a long-term investment and take advantage of Rupee-cost averaging. This means when the markets are down you get more mutual fund units and when the markets are on the higher side you get better returns. Over a long period of time if you keep investing little amounts of money through a SIP, you will average out and beat stock market ups and downs.

Is there something I need to do before I invest?

You may need to read a bit about these funds in analysts’ reports on various mutual fund schemes in different categories. These reports are easily obtainable online. If you have trouble going through these reports, you can take the assistance of a financial advisor. Financial advisors are professionals who help investors manage their money and invest better.

How can I start a SIP?

Starting a SIP is easy. To do so, you will need to choose the mutual fund scheme, the frequency of deduction for SIP instalment, the SIP tenure and the SIP instalment amount. Before you start SIP in a scheme, you will need to make an initial investment in the scheme. To do this, you need to fill a mutual fund application form along with the SIP enrolment form. You will also need to furnish a Know Your Customer acknowledgement. Your SIP enrolment form has details such as the SIP start date, frequency of the SIP, investment period, etc. You have the option to issue post-dated cheques for your SIP or opt for a direct debit mandate from your bank account. If you opt for the direct debit option, your SIP will be deducted from your bank account at the chosen frequency automatically. Keep in mind that it can take up to 15 to 21 days for a new SIP request to be processed.

Conclusion: After you have set up your SIPs, you can be worry-free that at least some of the money that was being spent before is now being accumulated to build your wealth. This is a big step. You are also now learning more about how to put something aside and let it grow with time. Soon it will be time to start enjoying the turnaround in your financial health.

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Mutual fund investments are subject to market risks, read all scheme related documents carefully.