1. Most people like to buy at the right time, and this supersedes all other considerations.
2. This attitude is harmful as it is not conducive to building long-term wealth.
3. Investing, like most other activities in life, should be primarily based on your own needs.
4. Need-based investing means keeping the focus on yourself, your income, your savings, and your needs.
5. This is the core task only you can do and need-based investing is about retaining this focus.
6. Identify whether your primary need is INCOME or GROWTH, as this essential classification helps you choose your assets.
2. This attitude is harmful as it is not conducive to building long-term wealth.
3. Investing, like most other activities in life, should be primarily based on your own needs.
4. Need-based investing means keeping the focus on yourself, your income, your savings, and your needs.
5. This is the core task only you can do and need-based investing is about retaining this focus.
6. Identify whether your primary need is INCOME or GROWTH, as this essential classification helps you choose your assets.
A) WHEN YOU ARE BEGINNING TO EARN
1. Your need for income is high, as there are several unexpected charges on your regular income, from events like marriage, aspiring for a vehicle, job risks and costs of higher education.
2. Don’t buy assets that will take away your income in the form of premium, loan installments, etc.
3. You will need income-generating assets, such as bank deposits, bonds, debt funds and saving schemes.
4. These can be liquidated without losses and can supplement your income at short notice.
5. Your investment in growth assets, such as equity and equity mutual funds, should be smaller in proportion and flexible in terms of your contribution.
6. Property won’t fit in here unless you have a stable job and your household income is quite high compared with your expenses, leaving a large surplus to comfortably pay the EMIs.
1. Your need for income is high, as there are several unexpected charges on your regular income, from events like marriage, aspiring for a vehicle, job risks and costs of higher education.
2. Don’t buy assets that will take away your income in the form of premium, loan installments, etc.
3. You will need income-generating assets, such as bank deposits, bonds, debt funds and saving schemes.
4. These can be liquidated without losses and can supplement your income at short notice.
5. Your investment in growth assets, such as equity and equity mutual funds, should be smaller in proportion and flexible in terms of your contribution.
6. Property won’t fit in here unless you have a stable job and your household income is quite high compared with your expenses, leaving a large surplus to comfortably pay the EMIs.
B) AS YOU AGE WITH A SETTLED CAREER
1. Your ability to invest in growth assets increases.
2. You should now add property, equity, and equity funds to your investments.
3. Sticking to fixed deposits, Provident Fund, and such safe assets will short-change the growth and capital appreciation that your investments can enjoy.
4. As your savings capability increases, your investment in growth assets should move up.
5. Your investing horizon is 15-20 years before you retire, and 3-4 years of under-performance of equity should not deter you.
1. Your ability to invest in growth assets increases.
2. You should now add property, equity, and equity funds to your investments.
3. Sticking to fixed deposits, Provident Fund, and such safe assets will short-change the growth and capital appreciation that your investments can enjoy.
4. As your savings capability increases, your investment in growth assets should move up.
5. Your investing horizon is 15-20 years before you retire, and 3-4 years of under-performance of equity should not deter you.
C) AS YOU NEAR RETIREMENT
1. Your income needs will come back.
2. You should slowly reduce the growth assets and move towards income assets, such as fixed deposits, debt funds and saving schemes, to supplement your income after retirement.
3. By the time you retire, you should be living in your own home, without debt.
4. You should have a corpus set aside to grow in equity assets for another 20 years into retirement.
5. The rest of the money should be in assets that deliver regular income.
1. Your income needs will come back.
2. You should slowly reduce the growth assets and move towards income assets, such as fixed deposits, debt funds and saving schemes, to supplement your income after retirement.
3. By the time you retire, you should be living in your own home, without debt.
4. You should have a corpus set aside to grow in equity assets for another 20 years into retirement.
5. The rest of the money should be in assets that deliver regular income.
D) REMEMBER
An investor builds wealth over a span of 40 years, from the age of 25-65 years, draws down from it and gives it away in the next 25 years.
An investor builds wealth over a span of 40 years, from the age of 25-65 years, draws down from it and gives it away in the next 25 years.