Want to become rich? 10 tips to help you start your journey towards being financially independent

Understanding and using different financial skills, such as budgeting, retirement plans, debt management, and tracking personal expenditures, are all parts of having financial awareness. Being financially independent is crucial for everyone, not just those aware. You will have a higher chance of accumulating an enormous fortune and becoming wealthy the earlier you begin.

Although it's not an easy effort, most of you are already focusing on your finances. You can occasionally question whether you're making the best choices and using the best resources to help you reach your financial objectives. Here are some investing tips that you should start using right away.

1. Avoid attempting to time the market if you invest in equity.

Market timing is the practice of forecasting future stock market movements and basing financial choices on those forecasts. Siddharth Maurya, Resource Specialist, Expertise Real-Estate and Fund Management, told Mint that a dangerous tactic for equity investors is trying to time the market. He noted that investors would better develop a long-term investment strategy based on their financial objectives, risk tolerance, and investment horizon rather than attempting to time the market.

2. Diversified portfolio 

Think about building a well-diversified portfolio that includes gold, silver, real estate, and stocks. Due to its poor connection with equities, yellow metal is a buffer against a typical "equity-debt portfolio." 

"Keep a long-term investment horizon and avoid making impulsive decisions based on short-term market fluctuations or emotions. Regularly reviewing and rebalancing your portfolio based on your investment goals and risk tolerance is important," said Siddharth Maurya told Mint.

3. Liquid funds for financial contingency

A contingency or emergency fund is a crucial component of your overall finances. The emergency fund's main function is to act as a substantial financial safety net in times of need. It makes it easier to handle any financial emergency without jeopardising your investments, primarily set aside to meet your long-term needs. Every family must maintain an emergency reserve depending on the required monthly expenses. Despite having insurance, such a fund is helpful in any health-related emergencies. The short-term debt securities that liquid funds invest in include treasury bills, commercial papers, and certificates of deposit. These products frequently produce larger returns than standard savings accounts or fixed deposits. According to Maurya, you can quickly withdraw or redeem your investment from liquid funds in the event of an emergency, and the money will be deposited to your bank account within a few hours. 

4. Assured return options in your portfolio

We shouldn't concentrate just on returns when making investments. While the goal of fixed-income investments should be stability, downside protection, safety, and liquidity, the goal of investing in equities should be growth and higher returns. Consider investing in fixed-income products like the Public Provident Fund (PPF), bank fixed deposits (FDs), Senior Citizen Savings Scheme (SCSS), Post Office National Savings Monthly Income Account (POMIS), National Savings Certificates (NSC), and Sukanya Samriddhi. Siddharth Maurya asserts that including guaranteed return investments with other assets in a diverse portfolio can balance risks and rewards while assisting investors in achieving their financial objectives.

5. Invest as much as you can in your EPF

A retirement savings programme run by the Indian government is called the Employees Provident Fund (EPF). For those in the workforce, it is a great investment opportunity because it offers a return guaranteed and supported by the Indian government. The Employees' Provident Fund Organisation (EPFO), a statutory agency under the Ministry of Labour and Employment, manages the EPF programme. It offers a safe and dependable way to save for retirement with the government's support and guaranteed returns. Therefore, start contributing as much as you can to your EPF to ensure your future, said Maurya.

6. Life and term insurance are options for your family's future when you are not present 

Life insurance, specifically a term life insurance policy, is essential for everyone in these unpredictable times. When you are not present, it enables you to safeguard your family's financial future. According to Maurya, you must have appropriate life and term insurance to provide for your family's financial requirements while you are away. Consult your financial counsellor about the finest coverage to meet your family's needs. According to Vinit Khandare, CEO and Founder of MyFundbazaar, changing your attitude towards money won't help you change your spending patterns; you must also be willing to do so. He offered some ideas on how to succeed financially.

7. Script your own financial expenditures

Your financial success should resemble your success, so you must approach it similarly to how you handle your life's accomplishments. Explain in your writing the variables that affect your financial decisions and the lessons you have already learnt. This will make it simpler for you to recognise your shortcomings and the decisions that continue to limit your capacity to increase your income, savings, and investment returns in the future. Go over your decisions daily to improve your financial management.

8. Carve your financial identity

It would help if you were equally focused on creating your financial identity while allowing your financial activities to speak for you. Consider consulting an expert to learn how to invest, where to put your money, and how much to invest as not everyone has a natural knack for doing so. The right asset allocation helps you determine your risk appetite and how much money you should save up for different objectives.

9. Motivate yourself to become 'financially' independent

If you want to win the race to financial independence, you must keep pushing yourself to steadily earn more money. Make sure you are accountable for every dollar you waste. Berate yourself for accumulating unnecessary debt. Repent of not investing during a bad market. Reward yourself for paying off all of your loans early. Reward yourself when your investments provide a profitable return.

10. Do not worry about losing money.

Even from your losses, you will get financial knowledge you may not have otherwise. Unwanted triggers may cause you to spend money on items you don't need to. But you shouldn't let one failure make you forget your goals. The capacity to save money is nothing short of a blessing. The desire to learn how to apply your financial knowledge in daily life should come naturally. To calculate when you will be debt-free, regularly check your net worth. Massive wealth increase is not always necessary for financial stability. You are financially independent when you can spend time on your hobbies and buy everything you want without worrying about running out of money.

These suggestions will undoubtedly assist you in making future plans and increasing your financial independence.

Disclaimer: The views and recommendations above are those of individual analysts, not Asianet Newsable. We advise investors to check with certified experts before taking any investment decisions.