Earning for self or for the family is perhaps one of the best feelings for a person. This brings in several dreams, endless shopping lists, vacation lists, and many more such important expenses. Incidentally, the last thing that comes to mind is ‘savings’. It is equally important to invest and utilize the earnings properly.
At some point, we’d all have come across bits of advice for personal finance. We would have taken some, ignored a few, and the rest blindly followed. But not all advice is practical. Here are some personal finance myths that need to be busted.
Myth 1: Financial planning is not for me
Reality: Whether you have a lot of money or very little money, you need to manage your finances. Financial planning allows you to systematically meet your financial goals. You need to give time for your investment to grow. Say if you want to learn swimming, you will pay for a swimming instructor, buy a swimsuit and spend time practicing in the swimming pool. Similarly, you need to spend time understanding money management and financial planning.
Myth 2: Retirement is a goal that doesn’t need focus until the age of 40
Reality: People usually retire at the age of 60 or 65. Thinking about it from the age of 40 gives us enough time. It is the general notion of people nowadays. However, at 40, the financial responsibilities are at their peak. At that age, it’s difficult for people to set aside money for retirement. Investing a little every month towards retirement right from the time one starts working reduces the financial burden. Also, since the financial responsibilities in the 20s are hardly any, one can take more risk by investing in equities and taking advantage of the power of compounding.
Myth 3: Investing in equity is risky
Reality: Are you one of those who gravitate to guaranteed products? Fixed income products such as fixed deposits assure you of guaranteed returns. Equity has the ability to give you higher returns but not guaranteed returns than the fixed income product. However, it comes with risk. You can look at taking calculated risks. You don’t have to put all eggs in one basket. Instead, look at diversifying and don’t invest based on stock tips blindly.
Myth 4: One needs to be rich to invest
Reality: One doesn’t have to be wealthy to invest. One can invest with an amount as low as Rs 500 a month through SIPs in mutual funds. With more increased access to trading and investing through multiple platforms, investing has become as easy as online shopping. It is not about the amount you earn, but the amount you save makes you rich. start investing regularly in small amounts with consistency for the long term to build a sizeable corpus.
Myth 5: A financial planner is not required
Reality: Many are scared about numbers and money talk. Then there are those who think they know all about finances. However, when it comes to money, you may need a professional to handle your finances. You may not be able to keep a tab on all events that happen around you and impact your money. A financial planner will be able to help you navigate through different financial products and help you make an informed decision.
What is right for one may not be valid for the other. Don’t let these myths take away your financial freedom from you. Plan for a better future and financial freedom.
Associate – Research