First things first. You can learn many things about personal finance from warren Buffett. He started earning at an early age. He learns about income tax and takes depreciation of his cycle as a tax deduction. He is not the one who fell in love with gold; we all need to follow him here. Gold is a hedge against risk and not an investment. I am receiving many requests from my readers through email to write about bitcoin. Bitcoin and all cryptocurrencies are currencies and not a place to invest. George Soros, the investor famous for his bet against the British currency, said he never understood them. There are some formulas like 100 – your age equal the Equity share you keep in your portfolio. Warren Buffett never follows it. There is nothing wrong with Showing faith in your knowledge and sticking to your competence.
Learn about different asset classes. For making a financial plan, you will need knowledge about many asset classes like equity, bonds, real estate, and others. Always try to diversify but not too much. Keep a perfect balance between diversification and concentration. In simple words, don’t go that much ahead when and where you be confused. One thing I learned from my experience is to invest without hesitation when you are sure about the company. The market may take time to reward, but you will earn from it if you are right. If you don’t know about it, don’t hesitate to go to a financial advisor.
There are many things to learn from peter lynch, and you can safely say that please read One Upon Wall Street, a book by Peter Lynch.
Don’t try to copy any big investors. They have different risk profiles and different needs. We never understand what and when they sold. Selling the stock is an important lesson we all need to learn about. One lesson I learned in my early days is Investing is not a game where 160 IQ guys beat 130 IQ guys. The math you need for investing in stocks is all you get in the 5th class. So pls, learn and read about the concept of intrinsic value. It will be helpful in day-to-day life as well. People will tell you that taking debt is very good, but experience tells us that debt is one of seven deadly sins.
Take good care of your family. Don’t hesitate while taking life insurance. Learn about different types of insurance. Choose the right one. Don’t fall for the cheesy marketing made by the agents or while buying online.
Just ignore financial news. Many times they are not more than noise. When you are investing in the long term, please don’t be like one. Equity is the asset class that makes the wealth. As Warren Buffett mentioned, no one survived by going short on the US. Always remember that there is a compy behind a stock. It will either performs well or badly. If it performs poorly, the stock will misbehave. If the company fundamentals are good, the stock will perform well in the long term. Always calculate your return against inflation and all other costs. Add the dividend.
I talked much about emergency funds. I want to talk about here that keeping an emergency fund equals six months of expenses excluding all the unnecessary shopping. If you are keeping credit cards, use them wisely. They can be a double-edged sword as they can act as an emergency fund, but if you fail to pay them, they could be a big hole in your budget, maybe for life. Listening to friends or anyone clueless about Money. It is like suicide. Also, don’t expect any bailout from your relatives. they also have budgets. Why should anyone break their fund for rainy days for your situation? Keep one small amount of funds ready for your wrong time. That is what I call an emergency fund. Best place to keep it is in money market mutual funds.
Buying Expensive Gifts to lure someone is also wrong. But the biggest bad thing is to copy the lifestyle of Mr. Vijay Mallya. I wrote many such small things in my post How to Go Broke… I believe it is still good to post though not many people are reading it.
The most critical decision in your personal finance is to write a will. Keep your succession in mind. Here all I wanted to say is to talk with your lawyer.
Learn about mutual funds. What are they? What are types, and how to use them for sound financial planning is one crucial decision? Using online platforms like Paytm to buy them may be an excellent decision to reduce your cost. Understanding the price is one important factor when it comes to investment. There are some discount brokers. Use them.
Buying the House is one subject where many bloggers criticize me. For me, House is not an asset. It is the shelter where you can hide during your bad days. I agreed that there might be some costs like taxes and interest. But by paying them, you are keeping one good place on the earth. If you disagree with me, then you are free to rent a house. But then there are other risks.
Every generation has there own style of investing. So I am a little old school when I say that I love value investing. But what is value investing? Isn’t the potential for growth a matter?
Retirement planning is one important topic, and I believe writing anything less than different posts is wrong. I request you to search my website for it. I write plenty of things on it.
Financial windfalls are one thing where you need a financial advisor. I saw some examples which went bankrupt after the money they received finished. So I believe that manage them very wisely.
I will end by saying that the investment policy statement is one crucial thing that, sadly, India is not much famous for. But Request to all my readers that whatever you do with your personal finance, please plan it.
