5 mistakes that are stopping you from becoming rich
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5 mistakes that are stopping you from becoming rich

  • Highlights

  • To get good returns, don’t delay saving and investing

  • Neglecting insurance doesn’t help in the long run

  • Avoid overspending and try following a budget

  • Invest strategically and review your strategy periodically

They say money never sleeps, and so, it only makes sense to put yours to good use. Always focus on utilising your excess funds or an amount from your monthly income to grow your money over time. However, to do this you should know how to get the most out of your money by investing it correctly, and avoid any mistakes that may stunt your monetary growth.

Take a look at 5 mistakes that you should avoid for financial success.

1. Not saving or investing

You may earn a handsome amount, but if you don’t save or invest, you will run out of it eventually. This means you be able to buy your dream car, save for your retirement or finance your children’s future. So, it is best that you start saving consciously to maintain a cash reserve. However, to ensure that your money multiplies, it is important to invest your money in instruments that offer inflation-beating returns. Here, it is essential that you invest keeping your goals in mind and in instruments that balance risk and returns.

2. Overlooking insurance

Don’t think of insurance as an unnecessary expense. Instead, think of it as an investment for your future. Purchasing insurance not only helps you curtail out-of-pocket expenses should something happen to your home, car or your health, but it also offers returns that counter the projected rate of inflation and so, serve as an excellent investment. For instance, consider a situation where you don’t have medical insurance. You will have to pay for pre-and post-surgery hospitalisation, ambulance costs and of course, the cost of treatment and medication. However, if you have a comprehensive health insurance policy, these costs will be taken care of. Take care to mention a family member as a nominee in each insurance policy. This will ensure that your family will benefit in case of your demise.

3. Not investing in Public Provident Fund (PPF)

A PPF is an excellent instrument that you can invest in, even if you have a low income. You can pay as little as Rs.500, and earn a return of about 8–9% annually, so there’s no reason to not invest. Since it is a government scheme, the return on your investment is assured. In addition, it offers tax benefits under Section 80 C of the Income Tax Act and so, is a great way to build a corpus for retirement.

4. Spending more than you earn

It is imperative that you can differentiate between wants and needs and spend accordingly. If you don’t exercise discipline, you will end up spending more than you earn which has a domino effect on your savings and in turn, your investments. Prioritise your needs and spend as per a budget. This will help you grow your wealth over time and develop the habit of spending cautiously.

5. Investing haphazardly

Investing is good, but without a plan you’re just shooting in the dark. A strategy should serve as the backbone and help you invest in a manner that leads you to your goals. Market trends, economics and financial policies affect your investment mix. So, planning your investment keeping these factors as well as your risk appetite in mind will help you make the most of your money. Consider your micro environment such as your income, age, and employment status and life changes to make your strategy more relevant, and revisit it regularly to ensure that it caters to your goals in the best way possible.

So, instead of being unsure about how to invest and grow your wealth, take it up as an opportunity to read up on personal finance, draw insights from various perspectives, avoid these mistakes and seek professional help if you need to.

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