BE THE Wolf of Wall Street
It’s time you seriously ask yourself this! Do you have a plan or a financial planner who is working to make you rich? If not, you seriously need to consider it OR become an ace investor yourself. Why is investing necessary? The simple answer is – you don’t grow rich by saving money in a savings account! In the daily push and pull of our lives, we are unable to dedicate the appropriate amount of time that you must for investing your money. This is an important activity that you could do after work.
Simply investing in fixed deposits is not enough. Making your money work hard by investing it in the right investment vehicles is important. A good financial planner or good financial planning can help you build wealth and retire early. This is not a pipe dream. The right investments can help you retire by 35! You can actually achieve this with the right guidance.
There are many many people who invest in stock markets, gold, mutual funds, commodities, etc, and are able to quit their jobs and live only off the income generated from these investments. Yes, a simple Google search will tell you about the thousands of people who have done it, and I don’t mean the people who made millions by selling companies, but the normal salaried class!
Before you get excited about the prospect of retiring early, lets us check few points that you must keep in mind. By getting your basics right, you can easily build your retirement fund. This blog helps you take the steps necessary to begin your journey towards financial freedom! These are some of the most common questions that an investment advisor will ask you and expect you to know:
- What are your long term goals?
What is the Dollar amount you need every year in order to maintain a certain lifestyle? What are the major expenses that you shall incur? Buying a house, car, international vacations, kids education, children’s weddings, health expenses? Only after identifying the exact items of your needs, can you arrive at an approximate amount that you shall need in the future. Only by knowing your end requirement can you build a plan for reaching those goals.
- When must I start investing? Anytime is the best time
Many people in their 20s and 30s believe that they must start investing post their 40s or at a time they are closer to retirement. However, this is not true! Every Rupee that you invest today, starts multiplying from the day you invest it. So why wait for anything? Even a simple fixed deposit will yield between 6-8% per annum. In an age, where it’s really easy to buy anything at the tap of a button, it is a must to first save and invest, and then spend what’s left! Without investing first, you are bound to have very little left for investing.
Simply put, any money sitting idle doesn’t multiply on it’s own, but the money invested does! That’s how you grow rich.
- How much should I invest?
The answer for this depends largely on your income, your life stage and your life goals. Let’s assume that you aim to have a life that’s as luxurious as possible. The best case scenario would be for you to invest at least 40% of your family income. This is a number we have arrived at considering you have EMIs and school fees to pay. A household with two earning members is certainly better. In case you don’t have too many expenses, try increasing this amount to a 60%!
Honestly speaking, I have a tight hand when it comes to spending money. I always scout for better deals online, when I am planning to buy or spend on anything – insurance, clothes, credit cards or anything else. It’s quite easy to save a good Rs 3,000 – 5,000 each month (lets you afford a few Infosys/ TCS shares every month if you are smart) by choosing the right way to spend on monthly expenses. More on that in another blog.
How have I arrived at the 40% number? It’s really a lot of research and personal experience. Am I a multi-millionaire? No, but as a 20 something entrepreneur, I have made a decent bit of money in the stock markets, which is good progress, and this blog is a way to share those ideas and welcome some new ones. I will share the numbers wherever possible in order to provide references.
- What must you learn?
Just because you decide to invest, doesn’t mean you should start immediately! First understand the kind of person you are – understand your risk taking ability. Only with this knowledge do you know, if you have the stomach to take big risks with diverse investment products or safe investment options.
Investing can sometimes be nerve wrecking. Having the right information about investment products can help you know what to expect in a market cycle and it can prepare you about the highs and lows to come.
- How should he/ she be?
Yes, it’s a serious question! It’s as important as choosing a life partner. A financial planner is someone I wouldn’t want to change every couple of years – as it takes sometime to start seeing results and frequent changes in investment strategy can lead to little or no appreciation of your portfolio. This is a person whose advice you would like to consider for the rest of your life, hence the person must be absolutely trustworthy and having sound financial sense. He is someone you would like to turn to for any major advice.
He must be tuned into the current industry news, in order to help you identify the best deals/ investments for increasing your portfolio. He/ she must be able to understand what your life goals are and develop a plan accordingly. However, the advisor must have the courage to call you out, in case you have set any unreasonable goals.
Getting rich should not be the only thing that you plan for – staying rich and getting richer must be the goal! Becoming a Wolf on Wall Street is not a short process, it takes time, as you first need to get the knowledge necessary to become one, else you are permanently dependant on your advisor. Like everything in life, you must first prepare yourself with the knowledge and skills to become a great investor.