A Hopeful New Year!

                 

This is going to be the Fourth New Year Droplet will be welcoming. A really odd one in that since we have seen a pandemic that shut the world but then it did not shut the returns for the investors. This year saw both Equity & Gold giving some solid returns to the investors. Of the many lessons that 2020 gave, one that stands out is, "You have to be invested to reap returns market gives you" since many of us stayed out of the investing or quit investing and lost on what would have been a great year to reap the returns :)

Years may come and go, So would a Pandemic, the World may change accordingly but the rules of personal finance never change. Here they are -

1. Make sure you follow this at any cost –> Expenses = Income minus Savings
2. Save a minimum 30% of your monthly earnings. Alternatively, if you are a family with two earning members, try to save one person’s income at 100%.
3. Have SIX months of your salary as an emergency fund. Park it in a good liquid fund. Never ever, touch it for luxury spending. It is only for “Emergency”.
4. Have adequate medical & life insurance. With growing medical expenses, it is better to have at least 10 to 15 lakhs as medical cover for the entire family (as of today).
5. Make sure you have a life cover of 20 times your gross annual income. Revisit this once in every 10 years.
6. Start investing while you are young, preferably in your mid 20’s. Sooner the better, always.
7. Know the difference between endowment, ULIP and traditional insurance plans. None of them can be counted as "Investments". If you do not know, call us anytime.
8. Understand the significance of financial planning & asset allocation.
9. If you think your parents and grandparents never bothered about financial planning and saving for his or her future; then you are simply mistaken. Introspect. Their lifestyle was completely different from ours.
10. It is ultimately your life and you should “save” and be prepared for your rainy days.
11. Make sure you have a goal in place.
12. Align all your investments according to your goal and never break it until the goal is reached.
13. Pay off your credit card bills ASAP. Try to pay at least 2 months of your loan EMI as part payment every year.
14. Being debt free is heavenly. You will never understand it until you feel it.
15. Remember this, inflation eats out most of your money. What you can buy for 100 bucks today will not be the same after 20 years.
16. Ignore Inflation at your peril. Saving without understanding inflation is risky. That's why we say Fixed Deposit carries risk too. A Devil that we cannot see. 
17. Do not be greedy. Be happy if you can make 12 to 15% compounded returns for the next 20 years.
18. Bitcoin/Commodities/Crypto - All are nothing but gambling. They will take your money down the drain. Do it for pleasure (A pleasure that comes at a heavy cost).
19. Being frugal is the only way to become financially independent. More Importantly Being Frugal is different from Being Miser. Lookup @ tfd.com
20. Consult with your family before making huge spending or investment (buying a car or apartment).
21. Do not buy a depreciating asset on 85% loan.
22. Never buy a car, which is worth more than 6 months of your take-home salary.
23. In investing, always think long-term.
24. Last but not the least and the most important resolution for the year, "READ OUR BLOGS REGULARLY". 

Have a Healthy, Happy and Wealthy New Year.

For financial planning and investment related queries, write to us – dropletadvisory@gmail.com or call us at 99962399924 / 9551373455.