Well this is one of the most common question now a days, not only from young peoples but also by older that "How I plan my financial life".
Many of you are probably excited about the prospects of investing, but one of the most important aspects of sucessful investing involves the step you need to take before you start investing.
Step 1. Think Long-term
If you want to be rich some day than always keep in mind TIME. It is not the investment or amount which makes peoples rich but it is the time period of investment which make peoples rich and ultra rich. Any type of investment which is invest for Long-term gaves you better results.
I want to tell you a small story. In the year 1626, the Red Indians in the east coast of USA sold Manhattan city to a group of immigrants for $24. As per the tax records entire real estate of Manhattan was worth near about 4 Trillion in 1990.
Now what is your opinion did you think that Red Indians made a blunder mistake. And if they want to buy back that entire Manhattan, is it possible.
Now assume that If the Red Indians able to invest that $24 into an 8% compounded rate of return than they have grown to $30 Trillion from 1626 to 1990.
They just dont buy back the entire Manhattan, they can also be able to buy entire Newyork and Mexico.
That is the power of compound interest and time is the most powerful asset.
The first step a successful investor should take is to learn what it means to invest. Many young people feel that investing is similar to gambling or playing the lottery.
You have to accept the fact that investing is a long term process, not a short term gamble. Once you accept this, you are ready for next step.
Step 2. Pay off all your debt
You should't be consider investing if you are in debt. It is always a better idea to pay off your all debts before you start investing. The forms of debt are financial aid, car payments, credit cards and bank loans. Credit cards seems to be the biggest problem young investors face on the road to financial stability. My advice is to be get rid of those credit cards or use them only as a convenience and pay off the balance every month. It may be hard to do, it will be one of the best financial decesions you'll ever make.
Step 3. Make sure you are insured properly
You must have proper insurance in place before starting to invest. This includes adequate auto insurance, home owner insurance ( If you own your home ), health insurance, disability insurance ( If you are the main source of income in your family).
The more income you generate, the more you will need the protection insurance provides. Investing your money without adequate insurance is just like riding a motorcycle without helmet.
You never need it, but if you do, you'll be glad you had it.
Step 4. Set up an Emergency fund
Most financial planners suggest that you should have approx 6 months salary saved up in liquid account such as chekings, savings, or money market. This means if you make Rs 300,000 a year than you should have Rs 150,000 that you can get fairly quickly.
Perhaps one of the greatest benifits of an emergency fund is that it helps prevent you from withdrawing out of your retirement accounts, thus preventing withdrwal penalties.
Many of you are probably excited about the prospects of investing, but one of the most important aspects of sucessful investing involves the step you need to take before you start investing.
Step 1. Think Long-term
If you want to be rich some day than always keep in mind TIME. It is not the investment or amount which makes peoples rich but it is the time period of investment which make peoples rich and ultra rich. Any type of investment which is invest for Long-term gaves you better results.
I want to tell you a small story. In the year 1626, the Red Indians in the east coast of USA sold Manhattan city to a group of immigrants for $24. As per the tax records entire real estate of Manhattan was worth near about 4 Trillion in 1990.
Now what is your opinion did you think that Red Indians made a blunder mistake. And if they want to buy back that entire Manhattan, is it possible.
Now assume that If the Red Indians able to invest that $24 into an 8% compounded rate of return than they have grown to $30 Trillion from 1626 to 1990.
They just dont buy back the entire Manhattan, they can also be able to buy entire Newyork and Mexico.
That is the power of compound interest and time is the most powerful asset.
The first step a successful investor should take is to learn what it means to invest. Many young people feel that investing is similar to gambling or playing the lottery.
You have to accept the fact that investing is a long term process, not a short term gamble. Once you accept this, you are ready for next step.
Step 2. Pay off all your debt
You should't be consider investing if you are in debt. It is always a better idea to pay off your all debts before you start investing. The forms of debt are financial aid, car payments, credit cards and bank loans. Credit cards seems to be the biggest problem young investors face on the road to financial stability. My advice is to be get rid of those credit cards or use them only as a convenience and pay off the balance every month. It may be hard to do, it will be one of the best financial decesions you'll ever make.
Step 3. Make sure you are insured properly
You must have proper insurance in place before starting to invest. This includes adequate auto insurance, home owner insurance ( If you own your home ), health insurance, disability insurance ( If you are the main source of income in your family).
The more income you generate, the more you will need the protection insurance provides. Investing your money without adequate insurance is just like riding a motorcycle without helmet.
You never need it, but if you do, you'll be glad you had it.
Step 4. Set up an Emergency fund
Most financial planners suggest that you should have approx 6 months salary saved up in liquid account such as chekings, savings, or money market. This means if you make Rs 300,000 a year than you should have Rs 150,000 that you can get fairly quickly.
Perhaps one of the greatest benifits of an emergency fund is that it helps prevent you from withdrawing out of your retirement accounts, thus preventing withdrwal penalties.
