Here are some personal finance tips to debunk common myths and help you better plan your finances.
Investment Requires a Lot of capital:
It is one of the most common personal finance myths. A majority of youngsters believe that a lot of money is required to invest. Professionals who have just started their careers think they cannot afford to invest with a low income.
But, this is not true!
You can start an investment with a smaller amount. For example, one can invest in a mutual fund SIP from a small amount of Rs.500. You can also go with life insurance and term insurance for investing your money. Both are kinds of investments that need only 15 to 25K yearly premiums. Investments always yield better results. Starting investment early in life can help you to save on your taxes as well.
An Emergency Fund is not Essential:
Creating emergency funds is one of the basic personal financial steps. Due to a lack of money management skills and proper knowledge, many people ignore having emergency funds. If you think that arranging funds is quite simple at the time of requirement, then you are wrong!
By not having emergency funds, most people end up borrowing money or opt for instant personal loans at the time of emergency. It can cost much as the personal loan interest rates are very high. It is better to plan for the worst and start creating emergency funds early. For emergency funds, you need to allocate 5% of your monthly income and be prepared for the worst with the right approach.
Investment in Precious Metals Is a Good Move:
We all think investment in gold is one of the best investments. Let us bust this financial myth! Do you want good returns from your investment? Investing in precious metals like gold is never enough. Gold is a precious metal that does not witness much appreciation every year.
When you invest your money in other investment sources, there is a better chance of getting good returns. Investing in recurring deposits or fixed deposits may give you an annual interest of 7 percent. A mutual fund interest rate gives you up to 30 percent of interest. Consider the best investment source rather than investing in precious metals to get the best return on investment.
Credit Cards are Bad for Your Finance:
While Credit cards are not a problem it is important to properly understand and utilize the instrument. The main culprit is credit card debt. Many people believe that using a credit card leads to financial stress and debt. It only happens when you are not using your credit cards properly. Credit cards offer you convenience, huge rewards, and security, along with cashback offers. Some credit cards come with 0% introductory rates on balance transfers and use. Using credit cards the right way will ensure you enjoy rewards and cashbacks, free travel and the best discounts. Hence, using a credit card the right way ensures good personal finance management.
Be Debt-Free Before You Invest:
Do you think it is good to invest only after being debt-free? Many people believe only after becoming debt-free it’s good to start investing money. But if you wait to invest until you become debt-free, then it could result in a financial mess. Investing early in life gives you the best results, even if it is just a few hundreds per month. Making investments early in life helps you financially secure your future.
Do not Focus on Retirement Planning Until the Age of 40
For a salaried individual, the retirement age is 60 or 65. Do you think retirement planning from the age of 40 gives you enough time? Then you are wrong! At the age of 40, your financial responsibilities are at the peak. It would not provide enough time for your investment to perform and grow. Investing a little every month early in life towards retirement gives you the best solution. Start investment right from the time you start working. It not only reduces the financial burden but also offers good returns. At the age of 20, you have fewer financial responsibilities. So, start investing more and take advantage of the power of compounding.
Do not let the financial myths become a potential barrier to your growth. Make the best financial plan by considering the best personal finance tips by the experts. Personal finance ideas from experts can enhance your money management skills and help you earn and save more.