Insurance Personal Finance Finance Health Personal Development
Vishal Khandelwal
Vishal Khandelwal

@safalniveshak

12 tweets 56 reads Jan 05, 2023
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Some advice for young adults wanting to start their 'money' journey -
1. First, save money.
An excellent habit to develop early. Start with saving 10% of income. Gradually increase to 20%, 30%, and so on.
Practice this equation: Income – Saving = Spending
2. Create emergency fund.
May be 8-12 times monthly household expense. Keep that in liquid funds or short-term deposits, or under your mattress.
Do not touch this emergency fund to purchase a gadget, pay down-payment for a car, or fund a holiday. This is sacred money.
3. Get health insurance (mediclaim), and early.
For self and family (including parents).
Get one personally even if your employer provides a medical cover.
4. Get term insurance.
No ULIP, no endowment, just term insurance.
You don’t get any money back if you survive the insurance period, but this is the purest and cheapest form of insurance, and your dependents get a lot (compared to the premium paid) in case you don't survive.
5. Avoid debt. Or use sparingly.
Avoid borrowing to to buy liabilities (like a car) or to meet your 'aspirations' (even when you know that you will only live once).
Borrow, if you have to, for buying a home.
Ensure total EMIs < 30% of monthly income.
6. Start investing.
After creating emergency fund, and getting health and term insurance, start allocating money to investments.
1. Money you need in < 3 years - Cash, liquid funds
2. Money you need in 3-5 years - Liquid funds, FDs
3. Money you need in > 5 years - Equities
7. With equities, start with mutual funds.
One diversified equity or flexicap fund
One broad based and low cost index fund
One ELSS fund (for tax saving, if required)
8. Not owning stocks is not a shame.
Sticking with mutual funds if good enough. Don't worry if others are buying stocks and making 'fast' money on them. Play your own game. Run your own race.
Buy stocks only when you understand underlying businesses, their potential, and risks.
9. You can (will) lose (sometimes) in investing.
Even if you have made a well thought out decision, you can (and will) lose some money investing in equities (MFs or stocks). But if you know you made a good decision and the underlying investment remains good, stick with it.
10. Don't lose your way.
Losing (some) money is fine in investing. Don't lose your way...lured by promises of attractive returns made by gurus and influencers on social media.
Have a sound investment process and stick with it. A good process is like a good partner in a journey.
11. Finally, whatever you experience in your 'money' journey - good and bad - remember everything is temporary, and so you must enjoy the journey and the scenery than worry about the destination.
You will enjoy the journey if you walk your own path, not one(s) decided by others.
And if you need help when you seem to be losing your way in this journey, read things I've written here - safalniveshak.com - or simply write to me here - safalniveshak.com - with your questions and concerns.
I do not promise to help you. But I will try.
Thank you.
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