3 Simple ways to become RICHER in 365 Days

You have got complete 365 days. Why don’t you chalk out a plan to become richer by next year? The good thing is you don't have to employ some highly esoteric investment strategies or complex algorithms to become richer in a year's time. Some simple reorganisation in your personal finance management could make you richer. Almost always, the simplest are the most profound.

1) Make a Financial Plan:

This is the first and foremost important step to become financially successful. It is not your income, but your wealth that counts. People with high income like Michel Jackson died with a lot of debts. So a careful personal finance management is more important than how much you earn. To have an effective personal finance management system in place for you, you need to have a personalized well written financial plan.

What are the things you want to save and invest for? It may be for buying a home, buying a car, children’s higher education, retirement planning. Decide how many years from now you need to achieve each and every goal. Because you need to take into consideration the inflation for all those years and also you need to choose investment options based on the timeframe for investments.

You need to create your own list of financial goals. If you don’t know where you are going, you may end up somewhere you don’t want to be. To end up where you want to be, you’ll need a roadmap, a financial plan.

So create a financial plan for you and your family on this. There is a lot of help available for you online to create a financial plan in various websites with financial calculators. But if you want to create a more workable financial plan, you may seek assistance from professional financial planners.

2) Pay off all high interest debts:

You need to create a plan to come out your high interest debts like personal loan, credit card outstanding, car loan and the like. Credit cards can make it seem easy to buy expensive things when you don’t have enough cash. But it is not free money. To come out of debt, you need to have specific strategies that can work in your own situation. There are 11 ways to get out of debt and stay out of debt. You can choose one or a few ways from this to become debt free.

If you are not giving enough attention to your debt, then it can sink your financial ship. So take some time on this to list down all your borrowings and make out a plan to come out.

3) Start Saving and Investing:

As soon as you have paid off all your high interest debts, you need to start saving and investing for your financial goals. To save more either you need to spend less or you need to earn more. So you check up what are all the ways and means available for you to spend less and earn more.

If you are spending more than your income or all your income and you don’t have any money left to save or invest, you need to look for ways to cut back on your expenses. When you check where you are spending your money, you will be surprised to know how everyday petty expenses that you can do without add up over a year. You need to understand what makes us spend more and strategies to have self control with money to spend smart and save more.

When you started saving money, you need to convert your savings into investments. When you are choosing your investment option you need to take into account, the timeframe for investments, risk you can afford to take, inflation and your financial goals. Also you need to be careful in avoiding the biggest investment mistake. That is to choose a scheme in sync with basic investment principle. Make sure that you are not violating any investment principle. Don’t fall for speculative gains, ponzi schemes and get rich quick schemes.

Mutual fund investment by means of SIP ( Systematic Investment Plan ) is best saving option

If you follow these simple but authentic steps, by next year you will be richer than what you are in this year. Celebrate this year with much more confidence and peace of mind by following these simple steps for financial success.

The above matter views of Mr. Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached atramalingam@holisticinvestment.in

Risk of not investing in Equity.

Rajeev and Sanjay are classmates. They both had same level of knowledge and smartness when they completed their graduation. Rajeev hates to take the risk of traveling in a vehicle for the reasons only best known to him. Believe me; he travels only by walk wherever he goes. But Sanjay is ready to take risk. He uses all the mode of transports time to time convenient to him.

After 10 years of their graduation, they connected to each other on facebook only to know that they both are working for the same company. Rajeev is working as an accounts executive in Chennai branch. Sanjay is working as a Director-Finance in Mumbai, the head quarters of the company.

What made this huge difference? The ability and willingness to take risk.

Similarly investors should not hesitate to take risk. The ability and willingness to take risk by investing in equity will potentially increase your wealth considerably.

A person who is investing Rs.5000 per month for 25 years in safe avenues like FD or PPF will get around Rs.47 lacs; whereas if it is invested in equity it has got a potential to grow to Rs.1.64 crores. Huge difference! Isn’t it?

There are two types of risks. One is blind risk. It is something like driving a vehicle without knowing how to drive and driving without understanding the road rules. The other one is calculated risk where we know how to drive as well as the road rules.

An investor needs to take well calculated risks; not blind risks. One should know how to invest as well as the investment principles and techniques.

Suppose you don’t know how to do that and also don’t have enough time to learn those things, it is better to outsource it to someone who knows investing better. Mutual funds and Portfolio management services will serve this purpose for you.

Investing in equity is a risky proposition. At the same time staying away from equity is also a risky proposition, because inflation is like a slow poison, which will eat away the value of money over a period of time. That is if inflation is 6%, your investment should give at least 6% post tax return to maintain the same money value for your investment. If it is giving less that 6%, then your money value is eroding. If it is giving more than 6% then your investment is really growing. Equity is one such investment which has got a potential to beat inflation in the long term.

Don’t hesitate to invest in equities. Beat inflation and accumulate real wealth

The above matter views of Mr. Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in

How To Retire Sooner and Richer?

The mindset of today’s young professionals is changing radically. They would like to have a semi-retired life in their late forties or early fifties by taking up a hobby instead of a regular job.

Somewhere within all of us, there is a dream to reach a point in life where we have enough wealth to be able to choose the work we would like to do and the pace at which we would like to work, if at all we feel like working; a point also referred to as financial freedom. Financial Freedom is also interpreted as being able to spend whatever amount you like, on whatever things you like, month after month.

Here is a step by step guide to Retire Early.

How long you expect to live?

First of all, you need to decide on “How long you expect to live?” This is going to be the starting point for your retirement plan. This you can decide by your health history and your family health history.

Will you run out of money?

You need to accumulate enough money required to live up to that age. You need to calculate the corpus amount required for retirement based on when do you want to retire?, how much you need to spend every month after retiring?, Inflation, tax, investment returns and the like.

There are two things which can make you run out of money in between. One is inflation and the other one is medical expenses at the old age. So you need to be very careful in assuming inflation when planning for retirement. Also you need to be adequately covered with right health insurance policies.

Retirement corpus Break up.

You need to divide your retirement corpus into two portions. One portion of it is the corpus required to retire at the regular age. It could be 58 or 60. The other portion is the corpus required to live between the early retirement and the regular retirement. Say if you want to retire at 50, what would be the corpus required to live between the age of 50 and the regular retirement age of 58 or 60. First you need to accumulate money for your regular retirement. Then you need to proceed to accumulate for your early retirement. This way you break your targets and it psychologically gives you a lot of comfort in achieving early retirement.

Don't fall for get-rich-quick schemes.

To retire early, definitely you need a sizable corpus. Don’t look for any short cuts and get-rich-quick schemes. Only with the increased risk comes the increased return. If any scheme assures low risk and high return, then it is going to be another scam. So stay away from those schemes.

Don't fear stocks.

You need to consider investing in a well diversified portfolio for long-term. Diversified Equity mutual fund schemes are better. By investing in a diversified equity portfolio you will be taking calculated risk and not blind risk. Equities will beat all other asset classes in the long run. So it is an important option for those who want to retire early. Reduce your annual cash requirements for when you retire by working out a careful budget. The monthly income required after retirement is going to be an important criteria for deciding the retirement corpus. If you are comfortable with lesser income you can retire sooner. So you need to be careful in drawing a budget for cash requirement post retirement.

Investigate a better return on your savings.

Better return on your investment portfolio will help you retiring early. So maximize the return on your portfolio as far as possible.

Cut your current spending so you can save more.

Money spent is money saved. Spend less; save more; invest smarter and retire sooner. There are more number of ways to spend smarter to save more. Earn more now. Time is money. Don’t waste your time. Invest your time in revenue generating activities. Apart from your regular income source, there are other opportunities which you can exploit. You can create blogs; you can be a freelance writer; you can do internet marketing. There will be numerous opportunities based on your knowledge and skills if you take time to think and implement.

Take advantage of tax-deferred opportunities.

Tax deferment is an important tool for early retirement. Tax deferment means less tax now. If you pay less tax and you will have more money to save. You need to pay tax on FDs on maturity even if you renew them.Tax saving funds , Income funds and MIPs( Monthly Income Plans of mutual fund schemes) could be a better alternative to this. You need to pay tax only when you actually redeem.

Find out some ways to have an income.

Even after retirement you can have an income by way of a hobby or interest. You need not work on a regular schedule. Say you can be a trainer, you can be a blogger, you can be a consultant, or you can be an advisor in your chosen field. It generates money as well as it keeps you engaged after retirement. One of my clients has written a book and he is able to generate income from the copyright of that book year on year. If you are able to generate this kind of income, then you can retire early.

Retiring early is possible for each and everybody. You need to start planning for it little earlier. Professional assistance from financial planners will be of definitely useful to you, if you desire to retire sooner and retire richer.

The above matter views of Mr. Ramalingam K, an MBA (Finance) and Certified Financial Planner. He is the Founder and Director of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at ramalingam@holisticinvestment.in