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No matter the stage in life, it is vital that you are financially independent. It means having enough money to cover monthly obligations and expenses for many efficiently. While this is true, it is just one-half of the equation, as true financial independence is more than just having a sizable corpus stashed away or earning a steady income. It is a status you achieve when you can sustainably generate wealth, meet long-term goals and handle financial shocks. Naturally, this demands that you plan your finances well and have a diverse investment portfolio. 

While planning and budgeting help ensure that your obligations are taken care of, and your expenses never exceed your capabilities, investing grows your wealth. The latter is an essential part of ensuring financial stability today and tomorrow. If your investment strategy isn’t optimised, any wealth earned and saved will eventually get eroded due to inflation. So, this Independence Day, take the time to focus on building your financial independence and putting in the right controls to sustain it for the coming years. 

Here are a few tactics to help you get started. 

Adopt the principles of the 50/30/20 rule

Budgeting is a core element of financial independence. Without moral principles to guide money management, you will likely overspend or not utilise your earnings appropriately. It is why many follow the simple 50/30/20 rule. It dictates that you should devote: 

  • 50% of your income: To the essentials
  • 30% of your income: To your expenses and luxurious wants
  • 20% of your income: To your savings or investment instruments

It may not apply to all individuals, but the principle is still sound. Budget your money wisely and devote a set percentage to critical categories. Depending on your income, you may not need to save 50% on your fixed obligations, which means you will have unused money. So, use this principle as a guide and adopt similar budgeting strategies that best suit your lifestyle.   

Build a rainy-day fund

Also known as an emergency fund, this is another crucial aspect of financial independence. Emergencies are part and parcel of life, and very rarely can you plan for them. These often occur when you expect them, and you should always be able to handle such events. One way to do this is to have a sizable corpus at your disposal. You can build this fund by setting aside a small portion of your monthly income, leaving it untouched unless necessary. 

Besides the fund, you should also have suitable insurance packages. It is all a part of being financially independent, as there may be instances where you do not have enough funds. In these instances, insurance can come in handy; if not, your last resort is to opt for a loan. 

Have a defined, optimised, and risk-adjusted investment strategy 

When looking to attain financial independence, there is no substitute for having a sound investment strategy. You can consult professional wealth planners to help set the right strategies, but you must consider investment opportunities to maintain healthy finances. Keeping your money stashed in a savings account does little about long-term wealth generation. The interest earnings on a savings account are minimal and often aren’t enough to combat inflation. 

So, your money loses value over time, eroding your wealth. An investment strategy with the right mix of instruments combats this issue and works towards building long-term wealth. It is a core part of financial independence as sustaining your wealth ensures that you never lose this independence. Here, the smart approach is to diversify your wealth and risk-adjusted portfolio.

Equity funds are the standard choice for long-term gains with the potential for high profits. These invest in various companies, categorised based on their market cap, and these assets carry varied risk profiles. Mutual funds are market-linked instruments and do have risks associated with them. To counteract this, your portfolio should have a few fixed-rate investment instruments. Here, the fixed deposit is a prudent choice, especially now that the FD rates offered by reputed issuers are rising. 

One particularly smart investment option is the Bajaj Finance Fixed Deposit. Based on your investor profile, you can get up to 7.75% p.a., and these FD rates can help you quickly build a healthy corpus. You can choose a flexible tenor ranging up to 60 months and enjoy generous FD rates across all options. Best of all, the Bajaj Finance Fixed Deposit is an investment instrument you can trust as it has [ICRA]AAA(Stable) and CRISIL AAA/ STABLE, indicating the highest level of safety and lowest investment risk. So, start your journey towards financial independence immediately and invest online in just six steps.  

Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same.

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