- Never depend on just one source of income.
- Save atleast 20% of what you earn from all sources.
- Buy a plain Term Life Insurance of Sum Assured amount equal to atleast 30 times your annual expenses.
- Buy a health insurance for yourself and those who depend on you.
- Create an Emergency Fund equal to 6 months worth of your expenses. Till the time you have not created such a fund, don’t think about investing or buying luxury items.
- Start Monthly Recurring Deposits of 6 months. At the end of 6 months, use the maturity amount to create a FD for 1 year. Repeat every 6 months. To start with, use 20% of your savings (in step 2) to start Recurring Deposits.
- Use the remaining 50% of your monthly savings to invest in Stock Markets via SIP in Index Funds or well-established, diversified mutual funds. Do not go for sector specific funds.
- Use remaining 30% of your monthly funds to create a Market Crash Fund (use another RD). Keep saving money in it till the market crashes. When it does, buy quality stocks at low prices. To know which are quality stocks worth buying in market crashes…
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- Gold, silver and precious stones are good for social or religious requirements. These are not investments. These are insurances against bad times. (To understand this point, just think for a moment that will you sell gold or silver in case prices go up? The answer would be a No. You sell these only when everything else is lost. Period.)
- And always remember :