Age is on your side, and so is your savings habit. Good job there!
At 26, with 20 lakhs of savings and a monthly income of 50K, you’re off to a great start. The key to investing wisely is to think long-term. With decades ahead of you, you can afford to take some risks, and the best place to take that calculated risk is in the equity market.
Long-term equity investments have consistently outperformed other asset classes, delivering an average annual return of around 15%. With a long investment horizon, you’ll be able to ride out market fluctuations and take advantage of the power of compounding, referred to as the ‘eighth wonder of the world’ by Albert Einstein.
Consider investing in a diverse range of companies. But how do you choose the right ones? Use the ‘Roots and Wings’ philosophy. ‘Roots’ stands for companies with robust fundamentals – low debt, high return on equity, and top-quality management. ‘Wings’ stands for companies showing consistent revenue and profit growth, and displaying market leadership.
A critical piece of advice is, “Don’t save what is left after spending, but spend what is left after saving,” famously quoted by Warren Buffett. This simply means you should prioritize investing over expenses, except for the essential ones.
Insurance is an important aspect of financial planning, but it becomes critical when you have dependents. Being unmarried and without dependents, you may hold off on life insurance for now, but a basic health insurance is advisable.
Building a successful investment strategy is not an overnight process. It takes time, patience, and a little help. At Jama Wealth, our expert investment advisory and tailored PMS services are designed to guide you along your wealth creation journey.
Remember, it’s not about timing the market, but time in the market. Start now, and see where this journey takes you.
