6 Tips for investment resolutions for a better new year

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2017 is fast approaching. If you are ready to make personal resolutions for the New Year, how about making some financial ones as well!

1. Pay yourself first

When you receive your monthly salary, you think of paying your bills and the rents, 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 invest in your future first and then pay others.

2. Repay your debts

This New Year, cleanse yourself of all outstanding debts. Prioritize your debts in order of highest to lowest interest rates when making payments.

3. Invest throughout the year

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 9 months. Hence, do not wait until the last moment, make investing a habit throughout the year.

4. Keep a long term horizon

Long term investment in equity investing mitigates volatility and gives you the benefits of 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 rate of interest 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.

5. Diversify your portfolio

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.

6. Try new investment options

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!

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