Youth Incorporated Magazine

Don’t be a blind player and invest all your money in the stock market. There is an interesting concept in the stock market game called ‘risk appetite’. When you are younger you need to have a greater risk appetite than when you’re older. However, this doesn’t apply to you if you only have 10% of your income saved up. You need to follow these core tips to be able to save your money for the future that you need –

Save a lot more than you can expect

You need to save more than 40% of your monthly income in the bank. It doesn’t matter what you do with it, you need to save a large minority of it. You can’t be spending too much on watching movies, going out every weekend, or splurging on shopping sprees. You need to be careful with your money and spend it only on the things that are necessary. There is enough time for you to enjoy the things you need in life, and now is not that time. You need to work hard and save so that you can pursue the life that you want to in the future. Think about it like this – the amount of happiness that you get from watching 30 movies and restaurant dinners a year – is it really making you happy long-term? If the answer is no, then you need to change how you approach life and savings.

Safety above all

You don’t want to invest in your friend’s startup idea, even if you think that having 2 lakhs in your bank is good enough. Playing it safe is the right way forward. Once you do have a good amount of money to invest, consider the advantages and disadvantages of investing it in various portfolios. Is one better than another? Is it insured in any way? Does it meet historical standards of investing returns? Or is it a fluff idea that you think will work? Don’t fall into the trap of investing in the first thing you see. Even if you want to invest in a restaurant on a crowded place, play it smart and start something smaller to see the traction.

Analyze the numbers

Whether that’s a mutual fund scheme, a bond you’re purchasing or a stock in the national exchange, you need to double check all numbers. If the IRR isn’t matching up to what the company is claiming, then it could be a good opportunity to play it safe. However, if the numbers aren’t making sense to you then hiring an investment manager or looking at micro-investing (less than 1000 a month) may also make sense for you. It’s all about how much you have, and how much you can make – but its important to remember that the numbers speak the truth.

Don’t borrow money and don’t have debt

A lot of Indian youth buy and borrow a lot of things making them slaves to their investments. Don’t borrow money from anybody at this age, and don’t take up credit cards or loans. You want to be able to stand on both feet before you try to go out and impress people or start a new company that may not work out. Its only good in the movies, but real life has a lot of uncertainties which need to be analyzed. Borrowing money to invest, or even to buy things in life may be a recipe for disaster, as a short-term loan from any local lender can easily create interest penalties and hidden fees that make it worse off for you.

Don’t fall for fads or trends

This is the most important point of all and its key here. Don’t go for an investment or savings strategy if its in fashion. E.g. if everyone’s buying Bitcoin but nobody knows what Bitcoin is then that’s a fad which is waiting to be burst. Also, if someone is selling you high-hopes and dreams of magical investment, then they are probably a part of a pyramid scheme. These are the worst and its best to avoid them altogether, as they target a lot of colleges and workplaces.