New year, New Beginnings, New goals! Isn’t this what you want? Are you aware of where and when to start? In short, start ASAP and diversify your investments. Well, it not as simple as it sounds. You need to make sure you are well aware of all the products and are a disciplined investor. Get your personal finances, savings and investments on track with your goals. Let your 2019 resolutions actually be year-long resolutions and not just a one or two-month habits that you would forget and move on.
Here are 5 tips that would help you achieve financial independence and increase your net worth this year.
1. Do not invest in a hurry
Investments are to be well planned and thought off. Decisions made in haste may cost heavy on your pockets. Analyze your goal, investment duration, risk appetite and invest accordingly. Make sure you always attach goals to your investments. Review your current investments to avoid putting all eggs into the same basket. Diversification is the key to reduce risk in investments.
2. Make it a habit to invest
Are you a person who invests only when you have some extra money? Well, that isn’t how investing is done. Investing needs to be done on a regular basis. Rather than trying to invest with what is left at the end of the month, you need to set aside a certain amount for investing. The best way to do this is by automating your investments, for example, investing through SIPs in mutual funds is one of the best options available for investors today.
3. Go Debt-Free
Going debt-free is one goal that should be above your savings and investments. High interest from personal loans and credit cards act exactly opposite of good investments. This leads to lower net worth. Interest is stealing your money from you. Assuming that you earn 15% from your investments and are paying 18% as interest, do you think that you are making money or actually losing it? Ensure you pay off your debts this year, and do not let interest payments eat your returns. Paying off debts is a way to boost the overall sense of wellness. While it might seem a bit difficult to control your spending and save towards this, but paying off debt would certainly improve your financial picture in the long term.
4. Track your Investments
The new year doesn’t mean you only make new investments; you are also required to review your past investments. Investing and forgetting isn’t the right attitude. At least annually you need to review and revise your investments if required. Rebalancing is healthy and will help you stay up with the market movements. This will also help you gauge your position with respect to achieving your goal and will alert you for changes.
5. Tweak your lifestyle slightly
Your spending habits are never the same. With time your lifestyle changes, so will your spending habits. Determine how much is your average monthly spending and categories them. Avoid spending on things that aren’t really necessary. When you use either a debit card or cash for your purchases you are well aware of your balances. While credit card purchases for an impulsive shopper would leave them in deep trouble. Also, increasing spending habits and change in lifestyle wouldn’t match your current retirement funds. In other words, to be able to have a comfortable retirement lifestyle you either have to increase your retirement fund to match your lifestyle or spend wisely today to have a comfortable retirement.
Before making investment decisions for this year, make sure you keep these tips in mind. If you’re a new investor, stick to a balanced portfolio as it will allow you to get used to the market movement before taking on more risk. Hiring a financial advisor would help you plan your year and investments in a much more systematic way. Happy New Year and Happy Investing!