As you start earning, it is much more important to learn personal finance than buying everything on your shopping list. It is also the time when our seniors often tend to give us unsolicited and often misplaced advice about personal finances. But you need a better financial roadmap in 2022 than hearsay. Here are 5 personal finance advice that you should never take.
1. Using a Savings account to save money
Although the advice comes from the right place it is not very well-informed. A savings account is one of the most liquid assets we can have and whenever there’s something that tempts us, we can simply buy that thing off using our savings account. Now, that’s not an ideal scenario if you want to save money. Additionally, it is not uncommon for inflation rates to be higher than the interest rates offered in the savings account. So, there’s no actual saving.
2. Your Retirement plan can wait till the 40s
It’s a myth that your retirement plan and thus long-term investments towards that goal can wait. The longer you wait, the less you are going to have at the end of your career. It’s better to plan your investment as early as you can with monthly SIPs.
3. You need a lot of money to invest
There is no minimum amount you can start investing with. Choose the amount that you are comfortable with. A person earning $3000 per month should have no qualms about investing $300 per month. The exact amount however depends upon your investment goals.
4. Investments will lose you all your money
Investments are risky no doubt but it is not that investments are bound to lose you your money. Good investments make more millionaires than jobs could ever generate. The reason? Researched investments almost always bring positive results if given enough time horizon to go through business cycles. So, understand the market of investments first. Take help from experts to invest money, but don’t lose out on investing.
5. Emergency Liquid corpus is a hype
If there’s one thing that Covid has taught us is that life is unpredictable and we need to be well prepared for things we do not expect. A liquid emergency corpus can help us tackle any urgent situation with efficiency. It needs to be liquid, so can be a savings account, and should be used for emergencies only.
You do not need to be a financial expert to start investing. Take help if you need it, but make your investments as early as you can.
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