As lot of people keep asking me regarding the specific financial advice when entering a stock market, this quick-read article gives you some pointers before you jump into stock markets
- Best advice anyone can give to you is to Start Early and Early means NOW
- Whether you are earning 5k/month or 5lac/month, you need to start asap.
- Only when you start early, you can finish or reach your goal early
- A must step!! Build an emergency fund equivalent to 3-6 months expenses
- Understand the importance of emergency fund. There is no second thought about it.
- Always maintain the emergency fund and review it on yearly basis.
- Increase the emergency fund every year
Read in detail : Emergency funds
Buy Life Insurance & Health Insurance
- These two insurances should be in addition to any insurance cover your employer provides.
- Buy an appropriate term policy life cover (minimum 25 times of annual income)
- Buy an adequate health insurance (minimum 20 lacs)
Also Read : You should invest in Stock Market if
Also Read : You should not invest in Stock Market if
Become Debt free
- Apart from home loan, there should not be any debt.
- Clear off your credit card debts, gold loans, car loans.
Establish a household budget
- Maintain an elaborate budget with expenses under different heads
- Don’t run away from noting down every single expense ( every rupee for that matter)
- Keep %age of money for stock market investment and %age of money for other asset classes
- Follow Save first, spend later approach.
Follow Goal based investing
- Split your saving across different and appropriate set of investments
- Park your money in Fixed deposits, Recurring deposits, liquid funds, debt funds, gold.
- Start investing in Stocks and mutual funds when you are done with above steps
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Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.