2017 is fast approaching if you are ready to make personal resolutions for the New Year, how about making some financial ones as well!
When you receive your monthly salary, you think of paying your bills and the rent, buying your groceries, and so on. But, before you pay for any of those expenses, set aside a portion of your income to save. It means investing in your future first and then paying others.
This New Year, cleanse yourself of all outstanding debts. Prioritize your debts in order of highest to lowest interest rates when making payments.
People usually invest only during the end of the financial year or when their payroll department indicates the last date for reporting their tax-saving investments. But, it is more beneficial if you invest earlier in the year. For example, if you invest in PPF in January of a financial year, with the current rate of 8%, you will earn interest on your investment for only 3 months (Jan-Mar), but if you invest the same amount in July of the FY, you can earn interest for nine months. Hence, do not wait until the last moment; make investing a habit throughout the year.
Long-term investment in equity investing mitigates volatility and gives you the benefits of the law of averaging. Also, you can benefit from the power of compounding. That is if you invest Rs. 10000 for only a year, assuming the interest rate is 7.25%, you will earn an interest of Rs. 7250. However, if you invest the same amount for 3 years, you will earn Rs. 123365 (7250 + 7775.6 + 8339.4). Compound interest has the amazing power to make your money grow many folds in a safe manner.
A plethora of options are available when it comes to investing. There are shares, exchange-traded funds, mutual funds, bonds, real estate and so on. A wise man once said “do not put all your eggs in one basket” and the same holds true for investments also, hence the importance of diversification.
If you are looking for new investment avenues with lower risks and higher returns, explore peer-to-peer lending. As a lender, you can enjoy higher returns than you would do on a bank FD. There are several peer-to-peer lending sites such as LenDenClub.
Hope with our smart tips, you are all set to invest smartly in the New Year! Happy Investing!