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Business News/ Money / Personal Finance/  How to become rich: Ten tips that you should apply from today
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How to become rich: Ten tips that you should apply from today

How to become rich: The earlier you start your journey towards being financially independent, the better off you will be in amassing huge wealth and becoming rich

How to become rich: Your financial success should be similar to your personal success, which requires that you approach your financial success in the same way that you do your life's accomplishments. (Mint)Premium
How to become rich: Your financial success should be similar to your personal success, which requires that you approach your financial success in the same way that you do your life's accomplishments. (Mint)

How to become rich: Financial awareness is the ability to understand and effectively use various financial skills, which include budgeting, retirement plans, managing debt, and tracking personal spending. Not only aware, but it is very important for everyone to be financially independent. The earlier you start, the better off you will be in amassing huge wealth and becoming rich.

Most of you are already working on your finances, Although, it's not an easy task. Sometimes, you may be left unsure whether you're taking the right decisions and choosing the right tools which may help you attain your financial goal. So, here are some tips for investors, that you should apply from today.

10 tips for investors to become rich

1) If you are an equity investor, don't try to time the market

Market timing is the practice of attempting to predict the future movements of the stock market and make investment decisions based on those predictions. Siddharth Maurya, Resource Specialist, Expertise Real-Estate and Fund Management said that attempting to time the market can be a risky strategy for equity investors.

Instead of trying to time the market, investors are better off creating a long-term investment strategy based on their financial goals, risk tolerance, and investment horizon, he added.

2) Diversified portfolio

Consider having a well-diversified portfolio with equity, real estate, gold, and silver. The yellow metal acts as a hedge against a standard ‘equity-debt portfolio’ due to its low correlation with equity. 

“Keep a long-term investment horizon and avoid making impulsive decisions based on short-term market fluctuations or emotions. Regularly reviewing and rebalancing your portfolio based on your investment goals and risk tolerance is important," said Siddharth Maurya

3) Liquid funds for financial contingency

Emergency or contingency fund is an integral part of your overall finance. The purpose of the emergency fund is to provide a strong cushion for your finance in case of a crisis.It helps you to take care of any financial emergency without disrupting your investments which are predominantly earmarked for your long-term needs. Every family must have an emergency fund in place depending on the monthly mandatory expenses. Such a fund is extremely useful in case of any health-related contingencies despite having insurance in place.

Liquid funds invest in short-term debt securities such as treasury bills, commercial papers, and certificates of deposit. The returns generated by these funds are often higher than traditional savings accounts or fixed deposits. Maurya said in case of an emergency, you can easily withdraw or redeem your investment from liquid funds, and the amount is credited to your bank account within a few hours. 

4) Assured return options in your portfolio

Not all investments we make should focus only on returns. While the aim to invest in equities should be growth and higher returns, fixed-income investments should focus on stability, downside protection, safety, and liquidity. Invest in fixed-income investment options like Public Provident Fund (PPF), bank fixed deposits (FDs), Senior Citizen Savings Scheme (SCSS), Post Office National Savings Monthly Income Account (POMIS), National Savings Certificates (NSC), Sukanya Samriddhi.

According to Siddharth Maurya, adding assured return options, along with other investments in a diversified portfolio, can balance risks and returns, and help investors achieve their financial goals.

5) Invest as much as you can in your EPF

The Employees Provident Fund (EPF) is a retirement savings program that is managed by the government of India. It is an excellent investment opportunity for working individuals as it provides a guaranteed return that is backed by the government of India. The EPF scheme is managed by the Employees' Provident Fund Organisation (EPFO), which is a statutory body under the Ministry of Labour and Employment.

With the government's backing and guaranteed returns, it provides a secure and reliable way to save for retirement. So, start investing in your EPF as much as you can to secure your future, said Maurya.

6) Plans for your family when you are not around- Life and term insurance

Given the uncertain times we live in, life insurance, and a term life insurance policy are necessary for all. It allows you to secure your family’s financial future when you are not around. 

“Having adequate life and term insurance is essential to take care of your family's financial needs in your absence. Discuss with your financial advisor to choose the best policy suitable for your family's needs," added Maurya.

Simply redefining your attitude towards money is not enough to change your money habits; you must be ready to do so, said Vinit Khandare, CEO and Founder, MyFundbazaar.

He suggested some ways to achieve financial success.

7) Script your own financial expenditures

Your financial success should be similar to your personal success, which requires that you approach your financial success in the same way that you do your life's accomplishments. Detail the factors that influence your financial decisions and the financial lessons you have learned so far in your writing. This will make it easier for you to see where you made mistakes and the choices that are still harming your ability to earn more money, save more money, and make more investments in the future. To better manage your finances, review your choices each day.

8) Carve your financial identity

By letting your financial actions speak for you, you must equally concentrate on developing your financial identity. Since not everyone has a natural aptitude for investing, you may want to see a professional to learn more about how to invest, where to place your money, and how much to invest. Asset allocation is important since it identifies your risk tolerance and the amount of money you want to amass for various goals.

9) Motivate yourself to become ‘financially’ independent

You must continue to drive yourself to consistently earn more income if you want to finish the race to financial independence. Hold yourself responsible for each and every dollar you waste. Berate yourself for the unjustified debt accumulation. Repent of your lack of bear market investment. Reward yourself for all of the loans you have paid off early. When your investments generate a sufficient return, reward yourself.

10) Do not fear a financial loss

You will learn something about finances that you may not have known about, even from your losses. Unwanted triggers could lead you to buy goods you don't need to spend money on. One setback shouldn't, however, cause you to lose sight of your objectives.

It is nothing short of a blessing to have the ability to save money. There should be an innate drive to find out how to use your financial knowledge in day-to-day life. Check your net worth frequently to determine when you will be free from financial stress. Financial soundness need not entail massive wealth accumulation. Financial independence is evident when you can buy what you want and spend time engaging in your hobbies without worrying about running out of money.

These tips would definitely help you in planning for the future and becoming more financially independent.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Sangeeta Ojha
A business media enthusiast. Writes on personal finance, business and banking.
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Updated: 09 May 2023, 01:11 PM IST
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