Your financial planning is not just about making an investment. It is also about growing it steadily to fetch consistent and good returns. Here are 5 tricks to do so.
1. Start early
The sooner you start saving for the future, the more time your money gets to grow. It is the magic of compounding that works here and helps you grow your money exponentially even if you invest just a small amount of money. Compounding provides the multiplying effect to the way in which your money is growing.
Don’t put all your eggs in one basket. Rather, park your savings in different options like equity, fixed deposits, real estate, gold, etc. to spread the financial risk and maximize the returns.
3. Invest regularly
Regular investments help you take the benefit of rupee cost averaging. If you invest a large sum of money in one go, the short-term ups and downs of the market do not average the cost in the long term. The rupee-cost averaging allows you to earn a decent return even in a volatile market.
4. Try peer to peer lending
With the interest rates on investments in banks going down, peer-to-peer lending is a very good option to earn a good return on investments even after adjusting for inflation.
For borrowers, seeking loans from banks or other financial institutions is cumbersome. Also, these are available at a higher interest rate, which may not be feasible for some borrowers. Investors who have extra money to spare even after making investments in other financial instruments or want to earn higher returns can explore the P2P lending platform. They can lend their money to the borrowers at attractive interest rates, which are mutually beneficial. These days, there are several peer-to-peer lending sites (including LenDenClub) that are bridging the gap between online money lenders and borrowers.
5. Review your financial goals
Your financial needs in the 20s and 30s would be far different from when you are in the 40s and 50s. The investment needs a change based on your age, income, occupation, and financial goals. In the 20s, your risk appetite is very high, so try to invest in high-risk, high-return instruments such as equity. Towards 50s, you may be thinking about retirement savings, so it would be good to invest in low-risk or traditional instruments such as bank FDs or NSCs. So, you should evaluate your investment needs at regular intervals. Considering these tips while making financial decisions will help you to grow your investments and maximise your wealth constantly.