Life today is very complex involving a number of financial decisions on products, services and digital assets that you can invest into. However, for most people the unavailability of time and lack of financial knowledge surrounding these assets (digital and otherwise) ensures it is difficult to arrive at decisions easily.
As with anything in life, the sooner we get started on financial investment and saving money, the faster we begin to build our wealth and earn from it. On Steemit, even if you are earning only $5 on a post regularly, it would be wise to start saving it somewhere.
In the past few months I've had many friends ask me how I managed to earn a lot of SP starting from scratch and how I go about investing. The fact is that it's not what I invest into but more importantly that I'm dead serious about saving and investing consistently. I've learnt from my own experience that it's never too late to start planning your personal finances.
What are Committed Investments?
Ever plan your day or your week ahead? We give so much importance to planning our lives and the daily tasks we decide for ourselves but often ignore the importance of planning our investments.
We rush out of our home to meet our loved ones at a scheduled time but we never look at our financial commitments with the same level of importance. This is what leads to several issues in our lives. Often when you ask someone why they are worried, most common responses would include some element of a financial woe of one kind or the other.
Committed investments gives you a great risk cover and mental peace over a period of time. It's worth the hassle!
Importance of Financial Planning
The world revolves around money and if you are terrible with your personal finances, you will find yourself in debt pretty soon. One cannot ignore the time value of money, market volatility associated with stocks and cryptocurrencies, different investment products, insurance products as well risks resulting from year-on-year inflation.
As you can see, there are simply far too many things that you need to plan for, and if you cannot do it yourself, you must consider hiring a financial advisor to help build your portfolio. But start now, if you haven't already!
Evaluate your Assets and Liabilities and Family's Goals
If you are planning your personal finances and investments, it's important to make an assessment of your total assets, net worth and your current liabilities. Once you have these figured out then it gets easier to tend to the liabilities. If you're expenses outweigh your income then it needs to be addressed immediately.
Make a note of any family goals that needs a significant financial input and prioritize them based on their importance and needs. Sometimes a fancy new dining set might not be as important and fixing a leaky roof or bathroom fixtures or your child's school fees.
Importance of a Disciplined Saving Habit
Irrespective of what you wish to spend your money on, a regular contribution to savings or investment accounts often yields a good amount that can be used for something important in the long run. You will need to be extremely rigid with your saving habits in order to meet these financial goals. You cant expect to spend money quickly, regularly and expect to budget for a new car at whim and fancy.
Control your spending habit and try to automate your savings if possible. Being regular will cultivate a sense of responsibility and discipline within you very soon, and you will begin enjoying the process as you see the results from being disciplined.
Making an Investment Decision
You will need to introspect yourselves and find your most important needs and the extent of risk you are comfortable with. For example, cryptocurrencies tend to give you crazy returns in a matter of days or months but they are also extremely risky. If you are unwilling to sit tight through the low phase then it's best not to get into cryptocurrencies.
Personally speaking, I spread my risk across Cryptocurrencies, Stocks, Gold, Mutual Funds, Bank Fixed Deposits etc. Since I'm only 29, and my risk appetite is higher and the fact that I'm also comfortable with learning to trade exchanges, I have been able to make the most of my investments and grow my portfolio faster while ensuring I have set aside enough for a rainy day at any given point in time.
Anyone can learn the basics of investment, fundamentals of investing and market dynamics by setting aside a few minutes a day and learning about it.
Plan of Action to Meet Future Goals
Write down a plan that states all your immediate and long term future goals and chalk out a financial plan that includes high risk and high yield investments to low-risk traditional investments that is a stable store of value.
This will make it easier for your to plan buying a new house, having a baby and meeting it's future expenses, a new car or regular forieng travel for vacations.
4 Things to Remember when Making an Investment
- Always keep some money aside in a bank or any traditional savings account or method to maintain liquidity in case of emergencies. You don't want your 100% of money stuck in any asset class which you cannot withdraw for an immediate use.
- I found it highly encouraging to keep some amount of my portfolio in the stock market to help beat the inflation. Now, cryptocurrencies allow me to use my experience and do one better. Inflation is caused due to various reasons including but not limited to increasing supply of fiat currency and as the value of the money we hold continues decreases, we need more of it to buy anything of value. High yield investments come with substantial risk but they can get us ahead of the curve.
- Review your finances and financial planning annually. Take help from a financial advisor or learn how to do it yourselves. Set aside atleast 1 day in the year to get this done. I tend to review my portfolio regularly and adjust it every quarter.
- Include investments that gives you some kind of a tax rebate. Many times when I donate I get a tax rebate of my donations well. Many governments in the world give tax consideration to certain investment classes and you can do well to consider those in your portfolio as well.
Do you have a systematic investment plan? What strategies you use to ensure you save on a regular basis and grow your income? I'd love to read your thoughts in the comments below.
Disclaimer: I'm not a financial advisor and this is not a financial advise. It is my personal opinion and should be treated as such.
If you like my work kindly resteem it to your friends. You may also continue reading my recent posts which might interest you:
