As you start earning, you want your money to work hard for you just as hard as you worked for it. But, it is difficult to get started when you don’t know how to go about investing. You need to answer so many questions: How much to save? What do you plan for? Where do you invest? Is investing online safe? Is investing in the stock market the right way to go? These questions may seem daunting, but once answered, you will be well on your way to investing a portion of your salary for your future. All you need to do is follow the steps listed below.
- Budget your expenses and savings
The biggest roadblock in investing your salary is not budgeting. Make a list of all your expenses and categorise them into two groups—essentials and lifestyle. Utility bills, rent, and loan payments are your essential expenses every month. OTT platform subscriptions, ordering in, and going out make up your lifestyle expenses. From your salary, once you minus the essential expenses, before accounting for lifestyle expenses, you need to decide how much you want to save. Do you want to save 10-20% of your salary or less? You can allocate a percentage of your salary every month to savings based on your needs. The rest of the money can then be used for lifestyle expenses.
- Know your financial goals
Now that you know how much of your salary needs to be saved to invest for your future, the next step is to understand what you are investing for. You can estimate your career graph and expected salary until retirement based on your current salary. Alongside, you need to list your dreams. Be it marriage, a house, a scuba diving trip every year—you need to list your life goals and then categorise them into long term and short term goals. Emergency funds and your retirement corpus should also be included in the list. This will help you understand how much money you need, by when will you need it and for what. Defining your financial goals is crucial to planning your investment. It helps you bridge the gap in understanding how much you will earn and how much you need to lead your life on your terms.
- How and where to invest
Now that you have defined how much to invest and what you need to invest, you need to answer the next pressing question—where to invest. Investing in the stock market tends to scare many people. Rest assured, it isn’t as scary once you choose the right investment platform. Online investment platform such as Dhan make investing simple, accessible and secure, allowing you to make the most of the best investment opportunities available.
It is crucial to plan investment from your salary right from your first job. The power of compounding and easy-to-use investment platforms will ensure that you get to live the life you dream of.