Money Investment Ideas
If I was to start from zero from complete scratch. If everything that I have will be done for then. How would I have invested and started my investment journey to become a millionaire? Read this article till the end and start taking notes because by the end of this article. I'm sure that you will have your investment plan. Ready to start with this article is for everyone those who till date thought.
I want to invest but don't know how or those who listened to their friends and started investing. Everyone on the internet is saying Invest Invest Invest. Okay, you started investing due to them which is a very good thing but now you don't know what to do next and what is happening. This article is for every age group from 18 yr old kid to a 35yr old lady to a 60 yr old uncle for everyone in this article.
I'll talk about 7 steps to start your investment journey from the beginning to zero. If you don't know anything then read this article till the end. It will be very useful and if you already started your investment journey then this article will help brush up your basics again make sure you read it till the end because, in the end, I will tell If I was to start from zero again from where I would do it what would I do and how I would start investment journey.
1. Know Your Money
First of all,
- Find out How much money do you have? If you have a salary every month then how much is that?
- If you have an income then how much is that?
- If you get pocket money then how much is it?
- Whatever place do you get money from every month total that and include that?
In fact, include your old savings or old investments that you might have done before, or if you don't have an investment even then there's no problem. And make a list of monthly necessary expenses like food, electricity, travel car or whatever expenses you have written all of them.
Once you will know that you have this much money this is how much you earn? this is how much you spend? Only then you will be able to decide what you want to do next or how can you start investing.
2. GOALS
Now you know how much money you have. But now you must have this confusion where shall I invest? Mutual funds are there Stocks are there Equity is there Gold is there Crypto. So many things. Wait first of all know
- Why do you want to invest?
- You wouldn't be able to reach your destination. If you don't where to go and what is the destination.
- What are your goals why do you want to invest?
And goals can be anything like to buy a big house a luxury car, International vacations Educations, kids anything. If you want to do anything or in fact, you just have this goal that at my retirement I want a 10 crore rupees investment. So from car to house no matter how many goals write everything and assign a period to each goal everything must have a time period.
For Example, I want to retire by 45 years that when turn 45 I want to retire. I want my new car in the next 5 years and I want to be able to buy a house in the next 10 years and go on a vacation to Europe next year. Now what I did to every goal I have attached it to a particular timeline.
Once you have your goals and with a clear vision, you will be able to choose the right investment options to achieve them. How do you achieve those goals because for every goal different investment is suitable for one type of investment that won't achieve all the goals?
3. Salary Allocation and Income Allocation
Now what salary allocation and income allocation means now how much money is coming in you know that but this money that is coming in where shall you put them. So that we can achieve our goals a system gets formed and you can also grow investment discipline. Obviously, it depends on person to person everyone has different goals everyone will have a different salary allocation.
But now you have to think that today all of the money that I have I will blow it up and will figure out what happens tomorrow or you have to think that I can save today by living a minimal lifestyle and will live peacefully tomorrow. I will choose that you invest today or live a minimal lifestyle on today's date because you will have a chance of a better tomorrow because as we grow up our energy keeps on decreasing and our responsibilities increase.
Technically if you see then our dads are more responsible than us and he doesn't have that much energy that we have. So
Investment Techniques
- I usually invest 50-70% of my monthly income into investment.
- 30% goes to my living expenses but when I started I only used to put.
- 10% of my income into investment.
So wherever you are where you are starting from thinking accordingly to that. Earlier after traveling shopping parties after doing all of these things what I was left with used to invest that but then I made in my life. That let me first make investments according to my goals after that what will be left I will use that for my living expenses and this helped me grow my net worth significantly.
I will always suggest starting and trying to at least invest 30% of your income and as you move forward keeping increasing that percentage that whatever useless and unwanted expenses you have today try to keep reducing them and invest that to achieve your goals faster.
4. Know Your Risk Appetite
Now risk tolerance is how much of your investment you're willing to lose for earning higher returns. So ask yourself this question,
- What is my current financial situation?
- Right now what all responsibilities do I have?
- What do I want to do with this money?
Or what are my goals just because a friend is saying investing in stocks will increase crypto investment it will increase overnight doesn't mean you have to invest in that. Your friends are doing they might have a different risk profile every person's risk profile goals financial situations family conditions family backgrounds everything is different. So don't do it just because some friend is doing it look at your situation and then do it.
For example, let's say you need some money for some good reason let's say for higher education next year. So if you need money the next year only you won't invest it in high risky products like this because if the market goes down next year then you will lose your money. So you need to make sure that whatever you have you're putting it as per your risk profile and as per your goals.
Now decide your risk profile on basis of specific ideas on,
- How much do you earn?
- How much are your expenses?
- What are your goals what are your family conditions how many responsibilities do you have?
And after many things decide how you will invest.
5. Investment Strategy
Now that you know your goals now that you know that you should take little risks according to me I know I know my risk profile. Now is the time to make a strategy that will help you earn higher returns because at the end of the day we all want the highest of highest returns.
Now write your long-term goals medium-term goals and short-term goals on one side of the paper and in front of the long term write high risk write medium risk in front of the medium and write low risk in front of the short term goals. Do this right now on paper because according to this your investment strategy should be.
High-Risk Investments
Your money grows the quickest in high-risk investments but it also has the highest risk of tanking too. So only invest in high-risk investment when you don't need that money for 5 to 10 years only then you'll be a fruitful investor.
High-risk high returns mean,
- US Stocks
- Crypto
- Small Equity funds
And if you want to know what do experts think which stocks will give the highest returns.
Medium Risk Investment
Now you will only invest in medium risk when you need money in 3 to 5 years.
Medium-risk high returns mean,
- Blue-chip companies.
- Large-cap companies.
- Large-cap mutual funds.
Low-risk Investment
The low risk you only will invest in low risk when you if you want in a year or 2 years.
Low-risk high returns mean,
- Debt funds.
- Government bonds.
- Digital gold.
These are comparatively safe and they have fewer returns too. So make your investment strategy as per the basis of your goals and what you want and your risk analysis that will help you stay on track with
your investment strategy wisely.
6. Insurance
Insurance Life is unpredictable we don't know when which problem will arise and especially when problems are related to your health, life, or accident then we can't afford casualty. I know many people who made great investment plans but had to remove their money because of urgent medical needs and because of that they were not able to achieve their goals even though they were on track they wanted to achieve but they couldn't.
That's why the best way to keep yourself and your family and the money that you have invested safely is to get insurance and the best thing is to get insurance. And the best age to get insurance is right now because the lesser your age is when you take insurance the lesser premium you will have to pay.
Types of Insurence
- Life insurance
- Health insurance
7. Diversity your Investment
Diversify Your Investment this is the most important point that doesn't keep everything in one basket because if anything happens to that basket then your life's worth efforts will go in vain everything is gone and all the money earned in life is also gone.
You all must be thinking my goal is to take the car that's my only goal why should I diversify why not put all money in one place in one type of strategy NO. Even if you have one goal even then don't put all your money in one place diversification is very necessary.
You need to invest in 2 or 4 or 5 different kinds of investments to reduce your risk because just like how in life we have good days and bad days. In the same way, we have bad days in the market, and if on a bad day if you have invested in only one thing and all the money and that is going bad.
Then all of your investment will be over for that time but if you put it in different places one will increase one will decrease or one is decreasing other is increasing. So all your investments will automatically rise together and sometimes 2 will increase so rapidly that it will take care of 8 of the other losses.
How to Become a Millionaire From Scratch with 50K/month salary
If I started from Zero from absolute scratch everything was done for then how would I have invested and started my investment journey to become a millionaire I'll tell you this.
Income-50K/month
Suppose my income is 50,000 rupees per month then I would have invested at least 50% of my income into a couple of things. How? I'll tell you. Suppose if I am 25 years old right now and I don't have any family responsibilities.
Invest 25K Monthly
Since I live single so my expenses are less. So I would have invested 25,000 rupees every month in different things I'll give you the breakdown.
25% in smallcap equity Mutual Funds
I would have invested 25% indirect equity smallcap mutual funds since I am investing a small amount I will do it in mutual funds and smallcap because my risk appetite is more at this age.
25% in Index funds
Then I would have invested 25% of my money in Index funds I want to play a little safe but long-term.
10% in the US Stocks Mutual Funds
Then I would have invested 10% in US stocks mutual funds because in US stocks. If I am investing less than 2 lakhs then I will have a lot of tax problems. So I will do it in mutual funds that directly invest in US Stocks.
15% into Crypto
Then I would have 15% into cryptocurrency because I want to because I have a high-risk high reward. So I will do it according to me.
15% in Debt Funds
Then I would have another 15% in debt funds for emergency funds that if something bad happens tomorrow then every month my 15% will be secured for an emergency.
10% in Gold ETFs
Then the rest 10% into Gold ETFs because for more safety I would need more. That is how I will allocate my investment and that's how I will diversify.