Self Check #2: Money Mistakes To NOT Make This Year

Self Check #2: Money Mistakes To NOT Make This Year

We are discussing more money mistakes so that you don’t make them and have a smooth financial journey.

In our last blog, we talked about the most common money mistakes made by many Indians. We will be talking about more money mistakes in this blog to help you with your investment journey. This blog will not contain any jargon and that’s a Koshex promise!

Investing Late

As the saying goes, 

“Little drops of water,

Little grains of sand,

Make the mighty ocean

 And the pleasant land…”

It is important to start saving at least a little bit of money every month. A little bit goes a long way in helping you build a sizable corpus in the future. When you start investing from your first salary itself, it will make you a disciplined investor and also, help you benefit from the power of compounding. 

Let’s take an example. Miss A is investing ₹50,000 in mutual funds per annum. The fund offers 10% returns every year and she is staying invested for 10 years (SIPs in mutual funds offer compound interest). Miss B is investing the same amount in an asset which offers 10% simple interest for 10 years. At the end of the time period, Miss A would have made a total corpus of ₹1.30 lakh while Miss B would have only made ₹1 lakh. This is the power of compounding.

If you delay your investments by even 5 years, you would end up losing a lot of money. So, it is crucial that you set aside a little bit from your first salary itself.

Not Giving Time For Investments

When it comes to investing, time and patience are important. Many people think that investments are like a lottery ticket, which will give them high returns in a short period of time. That’s not how any legitimate investment instruments such as stocks, mutual funds, recurring deposits, PPF, etc., work. The biggest mistake done by a lot of investors is redeeming their money when it doesn’t grow 2x in a couple of days or weeks. 

If you want to redeem your money quickly, it means you are not having enough money in your emergency fund or your bank account to take care of your day-to-day expenses. Quick growth also carries a lot of risks, so it is advisable to give your investments a couple of years to earn good returns.

Not Having Enough Liquidity

In order to have a balanced portfolio, having liquid assets is highly recommended by experts. Sometimes, people believe that if they put all their money in long-term investment options such as Public Provident Fund, ELSS (which has a lock-in period of 3 years), LIC policies and so on. However, when they want to redeem some of their money for unexpected or sudden situations such as for paying hospital bills or going on a trip, they might not be able to redeem their investments. 

So, it is advisable to save some portion of your salary in a bank savings account or debt mutual funds. You can get access to these investments any time you want and redeem your money without any issue. If you would like to choose an instrument that offers better returns than your bank account, then look no further – Head to Koshex and choose Smart Deposits today!

Not Having Insurance

Most of the online investment platforms these days are talking about putting more money in mutual funds, stocks and avoiding traditional instruments. However, it is important to know that there is nothing wrong with putting your money in LIC policies and bank recurring deposits. However, you have to know the details about your policy and what and all it covers.

It is also crucial to have medical insurance for yourself and for your family. These assets will cover you during tough times, and also provide a sizable amount when they mature. So, read the policy documents carefully and understand how long you should be paying the premium, what the policy covers and how much amount you would be receiving upon maturity. If you haven’t bought an insurance plan and you are a living, breathing human being, you should go get one right now.

We hope this blog helps prevent you from making such mistakes in the future. If you liked this one, please check out our previous article on the same topic. We also write educational articles to help everyone understand the difficult concepts in finance. 

In the meantime, you can leave a comment about the best financial advice you have ever received in your life. We are curious to know about them!