The five key features of personal finance for dummies include savings, investing, financial protection, tax planning, and retirement planning. Know more about it in the given article.
You must save your money as savings to cover any sudden financial need. It could be a car breakdown or as urgent as losing your job.
If your aim is to increase money, then you must go for investing aspects so that you can achieve what you aspire. Investing is putting money/purchasing assets like a stock, bond, mutual funds, etc., in order to make your money grow. Mutual funds are an excellent investment if it’s done correctly.
Financial protection through insurance ensures that you and your family are able to sail through the hard times. Insurance also creates investment plans to turn your dreams into reality. Following kinds of insurance that all needs:
- Term insurance
- Health insurance and critical illness insurance
- Mortgage protection insurance.
- Personal accidental insurance.
Making adequate expenditure/investment, i.e., proper tax planning. With that, you can save a lot of money every year. Moreover, there are more than 70 exemption options through which you can cut down your taxable income. The two most popular
- Section 80C
- Section 80D
If you want to fulfill your needs in the twilight years, then you must go for retirement planning as it is necessary to make sure that you have enough bank balance by that time.
Crucial Personal Finance For Dummies:
Overlook your finances: Delay in your long-term financial health may result in danger so don’t wait for a major problem; start implementing your plan now. Invest and save at least 5 to 10 percent of your income: In preference, start investing in mutual funds through retirement savings accounts to lower your taxes. Make sure your future has financial freedom.
- Buy a house in ownership: Owning your house is much more cost-effective than renting, especially in the long run.
- Arrange for life changes: The superior you are at living within your means and expect life changes, the well off you will be emotionally and financially. Avoid purchasing cars, clothing, and so on that lose value extra on credit: Make use of debt only to make investments in things that gain value, such as a business or an education.
- Avoid using credit cards: Get rid of your credit cards if you have a tendency to run up credit card debt rather than use only cash, cheques, or debit cards.
Types Of Mutual Funds:
- Hybrid: Hybrid is known for its different types of mutual funds. It is a mixture of equity and bond.
- Money Market Funds: It generally has lower risk compared to the other types of mutual funds. It exercises constant effort to keep net assets value at one dollar per share.
Lastly, to make sure your future is emotionally and financially free, start following the above-mentioned points. It may help you in many ways as the financial world is far too risky to leave on a chance.