What are some financial tips that everyone should know?

By | July 23, 2018

Personal Fiance Tips and Tricks

Here is a small list of some of the most valuable personal finance tips. I have collected through past few years and found them very helpful.

  1. Read “Rich dad, Poor dad”. It literally changed my life.
  2. Have ZERO liabilities. Don’t get any loans unless it is an emergency. No credit cards, No car loan, etc., If you want to buy car, buy it with your own money. Strictly no liabilities. Home loan is exception, one can go for a home loan if the property have potential to generate positive cash flow.
  3. Set a goal to increase your assets. Assets are Real estate, Mutual Funds, Stocks, PPF, etc.,
  4. You will lose your money to inflation if you put them in Savings account or Fixed deposit. Only invest in instruments which gives you decent return after deducting inflation and tax.
  5. If you do online shopping a lot, then use cashback sites. Regularly check debit card reward points (points have expiry time).
  6. Always maintain emergency fund, preferably in liquid fund because of high liquidity (meaning, you can close and withdraw money anytime).
  7. Insurance is not an investment. Buy one good health insurance which covers you and your family. Avoid all other type of insurances which promises you huge returns after some years.
  8. If you are investing in mutual funds, visit the fund house website, register and invest directly (Direct plan). Don’t go via brokers like Bajaj Capital (called as Regular plan). These brokers charge commission and in long term they eat lot of your money (in Lakhs).
  9. Only spend money on stuffs which you NEED. Don’t spend money on stuffs which you WANT.
  10. Buying a car is worst thing you can do with your money, unless you travel a LOT or you are a millionaire.
  11. Don’t give credit to anyone (except your blood relatives, ofcourse). It’s not worth it.
  12. No job is secure. Whether it is IT, Banking or anything. Automation is eating jobs. World is changing exponentially. We don’t even remember our once favourite brands Nokia, Blackberry. Airtel, Paytm made banking 100% virtual. Rupay destroying mastercard and visa. Whole Internet is struggling because of a simple application called Adblocker. So, always have some secondary skill.
  13. Save 20% of your income no matter what happens. Just think that you don’t make that 20%.
  14. Learn about taxing. There are soo many legal ways to reduce your income tax. You can deduct upto Rs.1,50,000 under 80C. You can invest that Rs.1,50,000 in ELSS which gives you more than 12% return.
  15. Day Trading is very risky. If you don’t know anything about trading then better avoid it. It is not for everyone.
  16. If you are making good money, then you can invest a small amount of money in Small or Micro Cap mutual funds. These funds carry huge risk but the returns are massive (20% to 30%). Meaning your money will be doubled in 3 years. If you invest 1 lakh now, it will become 1 crore in 20 years.

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