Do What Is Right for You and Your Money!
So you have extra money and money to spend? But what if you do not do it? We'll show you how to save one and what to do with that extra money.
Suppose you are working for nine to five jobs and your salary is Rs. 100,000 / -p.m. Not so much, not so much! But you can do many things with it. One of the best things you can do is start saving and investing. Start saving 20% of your monthly income. As a sixth rule, it is best to save at least 20% of your income. Don't let this money always be worthless. These savings may be invested in mutual funds. Joint funds provided a decent return of approximately 8-10% p.a. on a historical scale. Therefore, saving and investing Rs. 20,000 / - per month from shared funds for one year will leave you with Rs. 240,000 / - as principal and Rs. 14,400 / - as a benefit @ 8% p.a. at the end of year 1, it is assumed that the standard remains the same.
Now what do you intend to do with this money? Continue to invest in joint ventures and earn enough to pass the inflation monster (CPI score was 6.2% Y-Y in December 2018) *? Maybe this will not be enough for you.
What if you would like to spend this money? Would you like to buy that beautiful sound system, that home theater, that wardrobe, or your wife's jewelry for her birthday? If you think about any such lines, think again!
You know, there is a lot you can do with your money, but there is little you can take from it as long as you keep it idle or use it right away. So it will translate into a story that makes a loss. What about making this a profit?
First and foremost, keep some money aside for emergencies. Who knows what will happen tomorrow? It could be a rare illness, an accident, or a serious illness that you or any family member could suffer. What if your car is damaged in an accident and you do not have the money or insurance to repair it? For this purpose, you need some money. This is where your emergency finances will come in handy and help you in your medical emergencies or in your state of emergency (due to a car accident) in a country where a decent transportation system is almost non-existent. So, keep some money aside for your immediate needs.
Second of all, use one of these funds to clear up any debts you may have. Credit card debt can be a huge waste of your monthly income. So fix these debts and get rid of them. If you have debts or installments on your car or home, try to eliminate most of these payments without interrupting all your savings.
Third, and most importantly, you can now use your hard-earned and investment money wisely. But how do you manage your money? The answer lies in investing more. There are many categories of assets you can invest in today that offer a decent return. You can invest in savings certificates, Treasury Debts, PIBs, assets, financial markets, real estate, joint ventures, and stocks. Each property class has its pros and cons. If you keep your funds in savings accounts, while the funds are safe, the refund is legal. In the case of savings certificates, while the benefits are competitive, your finances may be closed for a long time. In the case of bonds, repayments are competitive, but there may be some restrictions on the length of stay involved etc. In all of these asset classes, historically, the stock market has offered the best returns. This is illustrated by the graph below.
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Historically, shares of the KSE 100 Index have yielded a return of 20.2% CAGR (Combined Annual Growth Rate) over the past ten years and a CAGR of about 15.13% over the past 15 years. These figures compare well with the profits made from other investment vehicles.
So choose the trading company you want to do business with, open an account, and start investing in the stock market. Whether you do so in equities or mutual funds or both is entirely up to you. Because stocks or equity mutual funds are a collection of various professionally managed portfolios, investing in mutual funds near the direct equity or stock market is a good idea.
If you invest Rs. 150,000 / - of your savings in the stock market and allow them to be consolidated for several years, you can get a good return in the end. Instead of keeping it in a savings account or investing it in any other investment vehicle, investing it in the stock market for a period of five years, for example, you can earn Rs 376,369 / - (+), assuming the rate remains the same. . This is more than double what you started with!
This shows that investing in the stock market is not only a better proposal than investing in any other asset in terms of return, historically, but it will also better equip you to protect your investments in inflation. As long as 20% of your salary is saved and invested for one year, you can save for emergencies, pay off some of your debt, and invest in the stock market (& / or mutual funds) thus earning a return of Rs 376,379 / - (+) after five years of investment. So save more, invest more, and reap the benefits of investing in the stock market!
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