Last Updated: December 23, 2022, 17:05 IST
You can keep it in a liquid mutual fund or a savings account.
An ideal emergency fund should be equal to your 6 months’ expenses.
The year is about to end, and we are about to step into 2023 in a week. Among many plans or new year resolutions that you may have, one should better money management and financial planning. For an investor, the new year will also bring an opportunity to create a new strategy and set a new goal. Let us discuss some crucial investments you can make that would grant you better financial security.
Let us start by discussing emergency funds. We have all learned from the Corona epidemic just how crucial it is to keep cash on hand during trying times. You must create an emergency fund in such cases. An ideal emergency fund should be equal to your 6 months’ expenses. You can keep it in a liquid mutual fund or a savings account.
The second mantra is to start investing early, which allows you to build a huge fund with less money. When you invest in a SIP or Mutual Fund, you get the benefit of compounding. It means that you not only receive the interest on the basic principal amount that you have invested but also on the interest that keeps getting added to it.
If you have started investing through SIP, do not forget to step up every year. This suggests that you should invest at least 10% more money the following year than you did this year. This will depend on your increase in salary or another source of income. Additionally, investing is fine, but it would be better if your strategy revolved around your tax savings. We should first take advantage of the tax exemption of Rs 1.5 lakh available under Section 80C of Income Tax.
The objective is the most crucial factor while investing. If we invest by setting a goal, we will know how much money needs to be put in and when our goal will be reached. When investing, you should aim for a time horizon of more than 5 years for equity and fewer than 5 years for debt and hybrid funds.
Instead of merely concentrating on gaining money, an investor should also pay attention to his safety. This implies that getting insurance is a must for you. By purchasing term insurance, you are ensuring the financial security of your family and relieving them of any financial strain in the event of an unfortunate event.
Read all the Latest Business News here
For all the latest business News Click Here
