Investment Planning and Necessary Precautions
Your financial health is just as important as your physical one, though most of us only realize this a bit too late. The best way to stay financially healthy to not get in a muddle in the first place, and the best way to not get into a muddle is by strictly observing the ‘DON’T’ rules listed below. You don’t need a consultant to help you follow these, as they are fairly simple and just need you to be aware, alert and vigil about what you do with your finances.
Simple DON’TS for Your Good Financial Health:
- Keep ‘Credit’ Out of Your Lives
Someone has rightly said – “Credit cards are to financial health what cream is to physical health”. In an ideal scenario, it is best of you stay away from credit cards altogether. However, if you must use them and in today’s online world, they have become a bit of a necessity, use them only for emergencies. Make sure that you switch over to debit cards when you shop at stores or pay your bills. Other things pertaining to that credit card of yours are:
(a) Try not to have more than one credit card, after all, the more the cards the higher the temptation to use them.
(b) Any good Financial Advisor CFP will tell you that if you do use credit cards, make sure that you pay your bills in full and at one single time (on time).
- Don’t Take Your Mind Off Inflation
You should know by now that inflation creeps up on your silently and has the potential to erode your asset financial values significantly. Even when you make investments in instruments such as Fixed Deposits, the interest you earn might indeed lag behind the inflation run. So in essence, the real value of the money you earn out of even your most prudent decisions might actually be lower than you expected it to be.
- Don’t Delay Investment Decisions
It is really simple math to know that when it comes to investing, the earlier you start the better it is for you. Every Certified Financial Planner swears by the power of compounding which is beyond your wildest dreams if compounded over a longer period.
- Don’t Sabotage Your Retirement Funds
Make sure that you not only build a corpus for your retirement but also keep it till you really need it. There will always be temptations to take some money out of this and use it for those irresistible urges like a holiday abroad or a child Harvard fee but be sure to resist them. If you need the money, pull it out from elsewhere, but don’t you dare touch this fund. If you succeed, you are a dream candidate for any financial advisor CFP.
- Be Careful When Playing the Markets
If you are one of those people who think that betting of the markets is the best way to ensure that you beat inflations, you need to know that the markets can beat you too. Flirting with the volatility of the markets without a safe proportioning of debt and equity investments can spoil the party in the grandest of ways. Enlist the help of a financial advisor CFP and listen to what he has to say, most times, it really pays to be sensible.
- Don’t Be Miserly With Your Insurance
Don’t treat insurance as a tax saving device, treat it with respect for it helps you in times of unforeseeable financial strain. Don’t skimp on it for it is truly a vital investment of your money. Don’t forget to consider other tax saving tools while you’re at it.
- Never Cash Out Your 401k
Resist that itch to cash out your 401k for it will hurt more than you think. Rather than making temporary monetary gains, the best thing to do is ensure that your 401k money moves with you when you shift jobs. Trust me, you won’t regret it.
Good luck with following these, they’re simpler than you think, especially when you actually start following them.