April 2019
« Mar   May »

PERSONAL FINANCE : Important principles


Good morning , wish all of you a very Happy and Prosperous New year. As we entered into new year , we should make a list of few important principles . This principles are directly or indirectly proportional to your wealth creations . If you are following these than you will one step closer of wealth creation. Apart from investing in Equity, Mutual Funds ,SIP , Real estate, gold etc , you need to give time for basic principle of Investing . So there are few basic rules of PERSONAL FINANCE , which are mentioned below…

  1. Don’t work for money. Focus on making money work for you. Its a basic investing philosophy . Money is not our Boss, we are the bosses of our money. So let money work for us. Money can work for us 365*7 days. If we give it right direction than it creates wealth , otherwise it will destroy your hard earn money. So in nut shell , Please be very selective when you are choosing master (Financial consultant) of your money.


2. Never say ‘I can’t afford it, instead say ‘how can I afford it? 

Always be optimistic . Again in context of             personal finance never say NO to your dreams , rather that try to find out the way to achieve it .Start small                    Saving for each goal. For Example – You Can Start Few Goal oriented SIPs for Different purpose i.e. Buying a      home,owning a car, kids education , family vacations etc. Believe me these small systematic savings will change your vision for a goal which you seems impossible. Just required right direction, right investment and passions.

3.  Never buy things on credit. If you can’t pay cash for it then you can’t afford it.

One of the cruel fact of personal finance is CREDIT CARD IS THE BIGGEST WEALTH SPOILER . If you are not using any credit card than you are the happiest person in the world. And if you are using it ,than be very cautious during its usage.

4. Focus on investing rather than saving.

Please Understand basics of Finance . INVESTMENT /INSURANCE/ SAVINGS are 3 different words with                    different meanings .

INSURANCE are to insure your life not for INVESTMENT .Life Insurance is for Life cover, Health insurance is for Medical cover and General insurance is for your Assets cover . In any case ANY INSURANCE CANNOT BE A INVESTMENT.

SAVINGS is also not an Investment .We save money for hard time, for fulfill any unseen expenditure. Savings are close to liquidity, which is available as and when required. Since Savings account gives you a annual interest of 3.5% which is far below the inflation rate. Even FDs Comes into bracket of Savings not investment. SO IN ANY CASE SAVING MAY NOT BE AN INVESTMENT .

INVESTMENT SERVES THE PURPOSE FOR WEALTH CREATION. There are many type of investments which serves the purpose of wealth creation. Investment usually beats INFLATION rates . It give appreciation to your money against  INFLATION . INVESTMENT is closely related to TIME. INVESTMENT venues will change according the time horizon.


4. An asset puts money in your pocket. A liability takes money out of your pocket. Spend your money buying assets rather to pay debts . Now for understanding buying car, A.C. , any consumer durable is not an asset creations, its a liability and if you purchase it on credit than it comes into bad debt category.

5. Turn your working/active income into passive income. Passive income is income that is generated from assets you own.For example you have a corpus of 10 lakhs in mutual fund and when you put this corpus in a good fund and put a SWP  for long term than you will start to get approx 10k monthly!! this is called your passive incom

6.Focus on improving your financial literacy. 9 times out of 10 financial literacy is self taught. It is not taught in school.There is no courses available on personal finance management . you need to learn it by self . you need to have a good PERSONAL FINANCE CONSULTANT(CFP) rather than any immature ADVISOR.


7. Always keep an emergency fund, this should be at least 10% of your income.This is very crucial . If you are not able to manage this than there may be BIG PROBLEM . You may trapped in debt .

8. The most important . Save & Invest at least 40% of your monthly earnings . This is a thumb rule for wealth creation. Remember its not only save its SAVE & INVEST . will suggest you to start 3 SIPs  for the same purpose .

First SIP , to ensure that your retired age will have enough money to survive , without any dependency.(LONG TERM)

Second SIP, to ensure completion of your MID TERM GOALS, i.e. Kids education, Kids wedding , Purchase of home etc. ( Medium Term)

Third SIP, to meet out you SHORT TERM goals and to ensure that you can withdraw money as and when required.

Its a well established fact that SIP is one of the best INVESTMENT for WEALTH CREATION in long term. Few Benefits of SIP like Averaging,Compounding, fund allocations, low costing and expense ratio make SIP as one of the most lucrative investment tool….

So, please have a look on these important aspects of Personal finance to make your life wealthy.