Do These 5 Things to Grow Your Money Smartly

It is a great feeling to know that you have money saved up in your savings account for any future emergency. But, wouldn’t it be just wonderful to see some part of those funds growing as the days pass by. You might say, “My money is growing in my savings account too.” However, the truth is that the growth percentage is only minimal and not as profitable as you might think it is.

There are several ways to grow your hard-earned money; however, only a few of them are smart options.

To help you start and make the most of your finances, here are five things that you must do to grow your money in the smartest way.

1. Start Early

You must have heard of the proverb, “The early bird catches the worm.” In case of investments as well this is true. If you start investing early, like when you receive your first salary, the more time your investment gets for growth. In your early years, you are strong, healthy, and full of life. Hence, there are lesser emergencies to attend to.

ULIPs among other investment plans can be a smart choice if you plan to invest early in life.

What is a ULIP Plan

ULIPs are financial products which are a combination of insurance and investment. Meaning you get the benefit of wealth creation along with a life cover. ULIPs are one of the most popular investment options today. The reasons being-

• ULIPs have a lock-in period of five years, which gives considerable time for your funds to compound and grow.
• You have the time potential for making high-risk investments, which makes ULIP funds, with higher exposure in equities, a good choice in the long-term.
• With ULIP plans, insurers like Max Life Insurance allow you to make free switches without any charges for availing the facility whenever you feel the need.
• Taxability of ULIPs is another plus point as investors are allowed tax deduction up to Rs. 1.5 lakhs for the premiums paid and the benefits received on maturity are completely tax-free too.

2. Invest Smartly and Consistently

Before you begin to invest, you must take time to understand all the ups and downs of the financial market. It is only but natural for anyone to get excited about investments, anticipating that all our dreams and goals will be fulfilled soon. This is why many early investors make the mistake of pulling out of these investments only to realise to their disappointment that their money grew lesser than what was ever promised.

You must understand that investments, especially those that are linked to the equity market require at least 3 to 5 years’ time (preferably more than 10 years) to meet the given promise of growth. Being a consistent investor gives you the benefit of decent returns on your investments despite market turbulence. Therefore, do not just rush into choosing any plan just because the description looks good. Do your research, compare benefits, and read between the lines to find an investment plan worthy for you.

ULIPs, for instance, have a wide array of plans that can help you invest for your future along with a life cover and many other features and benefits.

3. Diversify to Mitigate Risk

In the case of investments, diversification means to own a range of financial assets across various financial instruments. According to investment professionals, diversification cannot guarantee against losses but can assure the minimization of risks and volatility of an asset’s price while attempting long-range goals. Exchange Traded Funds (ETFs) and Mutual Funds are great ways to diversify safely.

4. Switch Investments as Per Your Priority

You might have lesser priorities and responsibilities while you are young, but certain priorities become important as you grow older. As a younger person, when time is in your hands, you can make high-risk investments without worrying about losses. Investments like sleepy cash, stocks are much more suitable when you are young. But when you reach a more mature age, like in your 50s, the scenario would be completely different for you. At this age, you want something more secure and reliable like debt-oriented funds.  Hence, whenever, you are unsure about the risk that you might want to take, choose your life’s priorities first and make a switch whenever necessary.

5. Automate investments

The boon of technology to us is time. In the present day, we no longer have to stand in long queues to pay bills or buy things. Everything is automated. So, as a smart investor, ensure to automate a part of your salary to pay off your premiums on time before you blow all of it off. Automating your payments ensures financial freedom and peace of mind that even if you have spent every penny from your salary, some part of it is safely tucked away for your future.

The good news is that you do not have to do much to grow your finances in the present day. The financial market has introduced numerous plans to choose from. All you must do is pick the one that is best and follow the advice given above. As a tree takes its time to nurture so does your money. Therefore, give it time, and it will grow.