Financial tips.
In today’s era, as income is increasing, the options to save and increase money are also increasing. Some choose fixed deposits, some make RD every month, some invest in mutual funds through SIP. These three options are considered safe and reliable, but sometimes small carelessness makes the entire financial plan weak. Let us know these are the mistakes which we can often ignore.
Relying only on FD may prove costly
Often people consider FD to be the safest and invest their entire savings in it. In this, money remains safe and returns are also fixed, but in the long run it is not able to beat inflation. If the interest rate is less than inflation, then the real value of money starts decreasing. Therefore, it is not considered wise to depend only on FD for big and long term targets.
Discipline is necessary for investing in RD
The purpose of recurring deposit is to inculcate the habit of saving every month. But many people do not deposit the installments on time or default from time to time. This leads to penalty and also loss of interest. RD becomes effective only when the fixed amount is deposited on time every month.
Stopping SIP midway is the biggest mistake
As soon as there is a slight decline in the market, many investors get nervous and stop their SIP. This is the most common and harmful mistake. The real benefits of SIP come in the long run, where the effects of compounding and cost averaging are visible. Stopping midway weakens the entire plan.
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investing without a goal
If there is no clear investment goal, it becomes difficult to choose the right option. Be it buying a house, children’s education or retirement, each goal requires a different strategy. Setting goals makes it easier to understand the duration and risk of investment.
Not having emergency fund can create problems
Due to sudden medical expenses or job-related problems, people are forced to break FD or stop SIP. This spoils long term planning. Therefore, it is very important to keep an emergency fund equal to 6 to 12 months’ expenses.
Make smart investment by combining FD, RD and SIP
It is better to strike the right balance rather than relying on a single option. FD provides stability, RD provides discipline and SIP provides long term growth. For good financial planning, set goals, give time to investment and avoid small mistakes.