Making Small Investments a Habit
As Warren Buffett suggests, “Do not save what is left after spending, but spend what is left after saving”.
We know that money has been an essential part of our daily lives. We have been made to understand to save money for the future. Remember the piggy bank your uncle gifted you on your 5th birthday? That was just to introduce the habit of saving and understanding the importance of regular investments.
Much before the concept of money was exposed to humans, barter was a prevalent method. With the rapid development and uncertainty of the barter system, the need for a more stable and value-oriented currency system was felt. Since then, money has been the king of the markets.
Lately, the masses self-educated themselves on saving a portion of their income for the future. Are you also willing to learn? Let’s explore some popular means where you save some bucks for the unforeseen future or maybe to achieve the financial goals you have decided for yourself and your loved ones.
As the father of value investing, Benjamin Graham rightly said,
“Systematic investing will pay off ultimately provided that it is adhered to conscientiously and courageously under all market conditions.”
Experts suggest that investing must be a regular habit. We all know that habits are not developed overnight, it needs the willpower to be consistent but once developed it will fetch you good results in the long run.
But before entering into a small investing space, you might want to thoroughly be aware of the most effective methods and regular challenges that may come your way.
Here are a few tips you can choose from to start small investments:
1) Diversified Investments:
Do not keep all your eggs in one basket. Divide your savings and keep them separately. Buy public sector policy or bonds, invest in stocks, opt for systematic investment plans, recurring or fixed deposits in banks or post office and or maybe mutual funds.
If your monthly savings goal is ₹1,000, divide it and invest it smartly on different platforms. It is always good to keep some money handy rather than just stocking it all up and struggling the entire month.
Learn, Earn & Educate. And repeat it. One must always keep looking for more knowledge when it is about money, keep updating. Apply your knowledge and earn and then indulge in educating others to opt for smart ways for investing. Remember, knowledge grows when you share.
Look up to millionaires. One thing that would surely catch your attention is their habit of reading. They read and learn all the time and keep applying their knowledge.
3) Start Investing at an Early Age:
Don’t wait for the right job. Start investing small even if you have just started your career and are making some money for your survival. Beginners may opt for a 5% rule. Just save 5% of your total earnings regularly and you may build money for your future.
If you are thinking that your ‘savings’ are safe in a savings bank account then you might want to rethink. Interests that you would receive from the bank is not likely to save you from inflation. What can you do? Buy stocks smartly & regularly.
One can start investing in stocks from as low as ₹500 and slowly can increase the value. However, don’t forget, Warren Buffett suggests that “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” So buy stocks only if you are looking to invest for a longer period. It’s all about consistency and patience.
5) Build an Emergency Fund:
A few things never go out of fashion, Have you ever thought why? Because it remained unbeatable. We all have seen our mothers saving some portion of the money and keeping it safe in Daal-Chawal Dabba. This is a typical example of her emergency funds. Somehow, the Millennials too learnt to save the same way but unfortunately, they fail to do it regularly and end up spending on their party essentials rather than the real essentials.
6) Have a Growth-oriented Mindset:
Whatever you have saved, make a point to grow it. Try to inculcate a compounding strategy in your saving and investment habits. How? When you grow in your career, make sure that you compound on your savings too.
When you earned ₹10,000 a month, you saved ₹500 a month as minimum savings. But did you increase the value of the savings when you started to earn maybe ₹15,000 a month?
7) Don’t Buy if it is not Essential:
The recent lock-downs and frequent market shuts too helped us in learning this very important rule. We were locked in our houses with limited cash and with only essential supplies. We learned that we can live a basic life in the 21st century too and holding a brand new fancy mobile or the latest gaming laptop, a hunky bike.
Before buying any one of the above make sure to question yourself, do I need these items or just want them? Can I manage without it? If the answer is NO, skip buying it. Living a minimalistic life is the new norm.
8) Focus on Your Health:
Investing in terms of money will be of no use unless equal importance to health is also given. All your savings may only be used to pay your health receipts if you neglect big on your health. Make sure to keep savings for better tomorrow and not just to pay bills. You may choose to buy a health insurance plan for any untoward situation. A healthy routine is never to be overlooked.