How to Grow Your Money - 8 Smart Ways!
- DetailsWritten by PolicyBazaar -
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Updated date : 25 November 2019
Everyone wants to grow your money. But before getting on the ‘how to’, let’s ponder on the very basic question - what is it to be rich? Is it driving a BMW or dining at high end restaurants or setting off on luxurious cruises? Well, these are just icing on the cake; to be really rich is to accumulate enough money to ensure a secure financial future. Coming to the meat, how can we get rich? Have you ever thought what is it that rich people have in common? It is their attitude towards money and a bit of luck of course. Rich people invest with a long term perspective and do not get deterred by the momentary turns and tumbles. We have come up with 8 of the best ways one can grow his money to its full potential.
1. Say No to Debt
For many people, debt is like marsh. They try to get out of their present debts by taking more debts sinking in the financial troubles deeper and deeper. Eventually it’s the habit that matters. Develop a habit that no matter what, you’ll take no more debt. For most of us, it’s probably the biggest barrier to getting rich.
If you are planning to invest, put two things on priority –
a) Pay off your debts from the petty credit card due payments to humongous loans
b) Vow to develop the habit of not taking the debt until it is way too necessary
Do not even think of investing until you get that heavy bag of debt off your shoulder. Once you are free of your debt, you should work on piling up liquid cash to suffice for your immediate expenses. Only subsequent to that, you will be up and ready to make an investment. In this way you can grow your money without any debt.
2. Be Consistent in your Investment
A moody person can be a good lover but not a good investor. There’s nothing like the vices of over investment and under investment. For most of us it works like this - we get all excited about a particular investment, put our goals and dreams in it and without giving it enough time to grow, pull our hands off it. It is human tendency to start something very aggressively and quitting within a few months, be it taking up exercises, learning a new language or investing. But in case of investments this habit results in a direct loss of money. If you wish to grow your money then you need to avoid such habits.
The reason why money grows by staying consistent towards an investment is the effect known as ‘rupee cost averaging’. Simply put, it refers to averaging of the short term ups and downs of the market in long term. It is because of rupee cost averaging that consistent investors get to enjoy decent returns in spite of market turbulence.
3. Don’t Put All Your Eggs in One Basket
Never be religious about any specific investment. Rather, be open to a range of investment plans at once. In investment terminology, it is better known as diversification. Simply put, it advices the investor to put his money across diverse options such as real estate, bonds, stocks and commodities. This is one of the best ways to grow your money by thinning out the chances of being at complete loss if one investment turns out to be a failure as you would still have other options to count on.
4. Switch Investments as Your Priority Changes
As one ages, the perspectives and priorities change. A regular guy in his 20s doesn’t even think beyond which tees to wear, which car to drive and how to impress women. These questions however become irrelevant to the guy in his 40s.
Your financial needs change with age and so should your investments. In your younger years in order to grow your money, you can think of putting your money in high-risk-high-return investments but as you grow older, it’s better to adopt a conservative approach and preserve what you have painstakingly earned and gained through your previous years. On a literal note, it means shifting from equity oriented funds to debt oriented funds.
5. Start Early
Banyan trees don’t grow to their full potential in one day. It takes time. And so is with investments. The sooner you start investing, the more time the investment gets for hatching, and the better become the chances of money growth. In a sense, investing is something that you should always have started a bit earlier to grow your money.
Suppose your financial goal is to retire early at 55 with a fortune to spend on yourself. Let’s go a step further and assume that you fix your target savings at Rs 50 lakh. Now it is obvious to see that you need to shell out a smaller chunk every month if you start investing at the age of 25 rather than 35 to grow your money.
The secret to why does starting early always works lies in the power of compounding. Compounding leads to an exponential growth of your money and its effect increases as the investment tenure increases. The thumb rule is, the earlier you start, the better grows the money.
6. Invest Smartly
Do not get enchanted by the blingy investment advertisements. Use your own insight and discretion while making your choice of investment.
- Always turn to investments suiting your appetite
- Never put your money in investments that you do not understand
- Do not invest more than you can put at stake
If you are the kind who wouldn’t want to let the stock market fluctuations eat away your hard earned savings, then you should adopt a conservative mode of investment. On the other hand, if you happen to be a crackerjack in riding the lows and highs of market and making the most of it, then stock market is your thing.
Try to make the best of investments by putting your money in tax saving investments such as National Pension Scheme (NPS), provident fund, ELSS mutual funds and so forth.
7. Put Your Fear Aside
No one learns swimming without stepping into water. So if you want to grow your money and become rich, you too have to put your fear aside and start investing.
Putting nothing to risk might be like putting everything to risk. Many people think that saving the money is same as investment. It’s not! If you choose to keep your money safe in a savings scheme rather than investing it somewhere, you might end up getting outrun by inflation and losing the value of your money.
8. Get Expert Advice How to Grow Your Money
If you’re a little dicey about your own financial goals and priorities, you better take professional help or consult to someone close who’s good with numbers and who has set an example of making money with wise investments. Let a financial advisor take a look into your finances and suggest investments that suits your needs and appetite. It might help you figure out an investment strategy.
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