Some basics that I've followed: 1. That old cliche, save before you spend. Plan your investments, and make sure the money for this goes out at the start of the month. Be a little aggressive here, see if you can stretch yourself and invest more. Your expenses tend to reflect what you have in liquid cash.
2. Try and put as much of your pay hikes into investments. Don't increase the investment just by the percentage of the pay hike. Put as much as you can into investments (example- if you earn 50K a month, and currently invest 10K, then when your pay goes up 20% to 60K, don't increase investments by 20% to 12K- push it up to 15K or more). 3. If you are employed, treasure and nurture your PF. Don't ever withdraw it between jobs. 4. Equities. Buy mutual funds and track them every few weeks/ months. If you can find the time, may make sense to join some of the stock groups and actively track some stocks. After years of taking bets on "promising midcaps", I've moved to buying 3-4 long term blue chips (ITC, Axis , etc) and putting the rest into good mid-and large cap mutual funds. 5. Pay off loans early- house loans, car loans, etc. A basic EMI calculator can show you the difference that increasing your EMI by a small amount can do. Example- EMI on a 50 lakh home loan for 25 years, at 10.5% is 47,209 a month. Increase the EMI to 55K, and it comes down to 15 years. Increase it to 60K, and you only have 12.5 years left. If you put sudden bonuses etc here, this can come down even faster. 6. Of course, the other financial basics- pay off credit card bills on time, keep 6 months pay in FDs for emergencies, buy term life insurance (think crores- a 1 crore insurance cover is less than 15K a year) 7. One thing that I should have done a bit more- set aside some money for consumption. I'm 36, but already wish I'd done a lot more traveling early on, instead of focusing solely on saving/ investing. On real estate- you get some pretty decent tax breaks on home loan interest if the property is let out. We are all going to need crazy amounts of money when we retire- healthcare, etc- and real estate is a decent way to compulsorily save something each month. Of course, you need to consider liquidity, interest costs, and the rest. -Lahar On Tue, Sep 30, 2014 at 9:11 AM, skn <[email protected]> wrote: > Hi all, > > All this talk about retirement and how closely coupled it is with > financial freedom got me thinking (more) about financial planning. > > I was wondering how my fellow Silkers (is that how we are collectively > called?) have been (or have already) preparing for financial > independence in the later years? What are the good financial principles > to live by? Some of the things I have been trying to get my head around > are about property as an investment, (long term) investing in company > shares vs. index funds vs. mutual funds, % income to save vs. how much > to invest vs. how much that can be spent (given I have very young kids) > etc. etc. > > Any insights, life lessons? > > -skn- > >
