Financial Literacy Part 3: Grow Wealth
You do pay a price for your Financial Freedom, but it is far lesser than what you pay for a Lifetime Slavery.
When you have extra money at the end of the month, consider investing it. Before you rush down the street to invest your money, you should first determine your personal risk tolerance. You can also download the evaluation.
Personal asset allocation commonly recommends allocating 40% of your monthly income to essential payments such as loan payments, 10% to insurance premiums, 30% to household expenses such as grocery and utility bills, and the remainder to an emergency fund and investments.
Knowing how to manage your money effectively is essential for achieving financial independence.
How much should you put aside for your emergency fund? There is no universal rule. The best advice is to set aside six months’ worth of expenses. If you have thirteen months of savings, you are in good shape.
Why would you require insurance? The COVID-19 pandemic emphasises the significance of health/medical insurance. Accidents do happen out of nowhere. When an accident occurs, personal accident insurance will come in handy. Examine your policies to see if you have enough coverage.
Don’t put all of your money into a single investment vehicle. If that particular investment fails, you could lose all of your hard-earned money. Diversify your investments to create a portfolio.
Before investing, always conduct research. Discover which investment type is best for you and why. Only invest in the type of vehicle in which you are confident and knowledgeable. Do not blindly follow your peers.