5 things the smart investors do with their money

There are individuals who earn a huge sum of money on a monthly basis and have huge surplus money. Many individuals doesn’t know what to do with their money and hence they tend to spend their money by buying iPhones, weekend shopping in a malls, etc.,. If you ask them a question, whether they planned for their child’s college fees 10 years down the line, or planned for his retirement, their answer is definitely no. On the other hand the smart investors do plan their spending wisely and invest for their future needs by doing a financial plan.

Money has that effect on people. It makes them want to rush towards the immediate and ignore the future. So you have more mobiles being bought than financial plans being prepared.

So, although it’s good to have money, it’s equally important to know what to do with it. We advise the below 5 things to become a smart investors.

1. Do your tax planning

If you are liable to pay tax, tie up your tax planning exercise. As a law-abiding citizen paying taxes is most important and so investing promptly in the right avenue to save tax assumes importance too. An individual can save tax upto Rs 150,000 by investing in tax-saving investment avenues. These avenues range from the traditional Public Provident Fund(PPF),life insurance to the more dynamic tax saving mutual funds(ELSS) . These avenues not only help in tax planning but if selected well can also help individuals achieve their long-term financial goals.

2. Plan now for your Retirement/Children Future

As being a responsible parent, everyone have a dream of providing a better education and provide a better wedded life to your loved children. This is considered to be the worrisome exercise for the parents. It is very much possible in the most uncompromising way if you plan it right. We help you identify and evaluate the best possible way in which you meet this goal. Always remember to consider the inflation when you plan for these goals. For instance, the cost of graduation today is 8 Lakhs for an engineering graduation today would cost Rs.20 Lakhs after 10 years.

Retirement is a bigger word for the one who is a working professional as they feel comfort living in a current scenario doesn’t think about the future. Do think about a cost of “dosa” 5 years ago and the cost now. The inflation will always play a vital role in retirement.At one point in time everyone has to retire from either from their professional life or from the business life. The cost of living and the life style keeps changing from time to time. Having the lifestyle changes, and the improvement in the medical sciences, the life expectancy is increased.

3. Get yourself insured

securing your family’s well-being is one of the most important goals of life. Insurance Protection plan helps you secure your loved one’s future against life’s uncertainties. An untimely death can cause a major setback to your family – both emotionally as well as financially, especially if you are the sole breadwinner. This is available at extremely nominal cost.

Anyone can fall sick anytime. You’ll probably have to sacrifice a dream or compromise a fund you have saved for something else. That’s where Health insurance steps in, so that one can have access to the best healthcare without fearing the financial strain. Guaranteeing this peace of mind is what we call, “taking the fear out of faces.”

4. Prepare yourself for contingencies

Contingencies/emergencies never announce their arrival. But that does not mean we close our minds to the possibility of their intrusion in our lives. As always, the best way to deal with such a situation is to provide for it well in advance. Such situations could possibly arise out of an accident / operation that is either not covered by medical insurance or exceeds the medi-claim limit or it could be another expense that you have provided for (like a buying a house) which actually falls short at the time of purchase. At times like these, having a contingency fund can prove to be a boon. How do you know how much to save for contingencies? While there is no formula for the same, you should have minimum of 6 months expenses to the maximum of 24 months of your expenses to meet the emergency needs.

5. Don’t forget charity 

Charity is always necessary. If you have the money, it’s only fitting that you share some of it with the less or under privileged. Although some charities qualify for tax benefits, our advice is you ignore them and just focus on giving some money away without worrying about how you can benefit from it one way or another.

Team Wealth Ladder

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