Freedom fighters fought against the British Raj getting us Independence on 15th August 1947. The blood and sacrifice of these freedom fighters are remembered even today as we enjoy a hard fought freedom. Let’s remember the martyrs who fought the British to give us precious freedom this Independence Day.
Attaining financial independence is relatively easy compared to the legendary effort of the freedom fighters. All you need is a little effort.
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There are a few tricks to follow and gain financial independence. Let’s take a look at some of them.
Set financial goals which could be short-term, medium-term and long-term. A short-term goal could be going on a vacation a year from now, a medium term financial goal could be buying a car 3-5 years from now and a long term financial goals could be investing for child’s education or retirement.
Setting financial goals = True financial independence
To be truly free with your money and enjoy financial freedom, you must save first and spend later. Set aside some money at the beginning of the month and make an investment in which you are comfortable.
Try to save at least 30% of monthly income and invest at the beginning of the month. This will go a long way in making you financially independent.
Save first and spend later to enjoy financial independence.
Emergencies strike without warning. Make sure you have some money set aside to meet any emergencies. If you are married, set aside at least 6 months worth of living expenses in an emergency fund. If unmarried, set aside at least 3 months of living expenses in an emergency fund.
Invest in liquid funds for financial independence in an emergency.
Avail life insurance especially term life insurance if you have dependents. This is a simple life insurance plan, where you pay a fixed premium for a sum assured for a fixed tenure. If you meet an untimely end within the term of the plan, your nominees/family gets the death benefit. A term life insurance plan has no survival benefit. Term life insurance plans are pure risk cover with low premiums. Your family gets to enjoy the same standard of living, they currently enjoy, even if something untoward happens to you.
You must also avail a family floater health insurance plan to meet unexpected hospitalization expenses for you or any family member. If you buy separate policies for each of your family members, then the premium paid on the multiple policies will be higher than the family floater cover. Under family floater, sum assured can be utilized by an entire family.
Keep your family secure with life insurance.
Understand the difference between a good loan and a bad loan before getting into debt. A good loan like home loan helps purchase an asset like a dream home, a car loan for a car you badly need or an education loan to enjoy a quality education and a bright career. These are good loans and you must avail them to enjoy a fruitful life.
The problem is bad loans. A personal loan availed to go on a vacation is a bad loan. A personal loan charges a high interest and you could struggle with the repayments. Using a credit card to buy things you want, rather than things you need, is a bad loan. A credit card charges a high interest of 24-36% a year on outstanding dues. You will soon fall in a loan trap.
Stay away from bad loans to enjoy financial independence.
Saving money will get you nowhere unless you invest it wisely. Inflation the rise in prices of goods and services with time eats up all your money. You must invest to get returns more than inflation.
Invest according to risk profile. If you are a conservative investor stick to FDs, liquid funds, PPF, NSC and other conservative investments. You get lesser returns but at low risk. Invest in mutual funds especially equity mutual funds or stocks, if you are an aggressive investor seeking high returns at high risk.
Be Wise, Get Rich.
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