Your Key to Finacial Freedom...

Why does financial independence remain a dream for most of us? Is it due to procrastination? Do we feel investing is risky, complicated, time consuming and only for the rich?
The fact is there is nothing complicated about financial planning.   It is important to plan and invest for your future because the future is bound to be expensive. Inflation is on the rise and because people are living longer, retirement costs are often higher than many expect.
Here are eight basic steps to get you started on the path of financial security.

• Organize your finances
  Ensure you have an adequate emergency fund, sufficient health, car, life insurance coverage, and a realistic budget. An adequate emergency fund consists of three to six months worth of your living expenses.
• Get in the habit of saving
  Try saving at least 10 per cent of your salary every month. Savings are kept in banks accounts and with savings, your principal typically remains constant and earns interest or dividends.
• Get professional help

Working with a professional is the single most important investment that they can make. Do not underestimate the value a professional (e.g. financial planner, stockbroker, commercial lawyer or real estate advisor) can offer in helping you define your goals, determine the type of risk that is right for you, and create a comprehensive investment plan.

• Invest where your money can grow at a meaningful rate
  Ensure you understand and can live with the risk. Your tolerance for risk is affected by several factors, including your objectives and goals, timeline(s) for using this money, life stage, personality, knowledge, other financial resources, and investment experience. Choose a mix of investments that has the potential to provide the highest possible return at the level of risk you feel comfortable with.
• Do not put all your eggs in one basket
  Divide your investment funds among asset classes that respond to different market forces in different ways at different times. This will help you minimize the effects of market volatility and maximize your chances of return in the long term. In a nutshell, multiple types of investments will reduce the impact of a loss on any single investment.
• Understand the impact of time
  There is no denying that financial markets can be volatile. Endure short-term price fluctuations and focus on long-term potential. Though past performance does not guarantee future results, money left in an investment offers the potential of significant return over time.
• Take the liquidity of your investment into account
  As a rule, the sooner you will need your money, the wiser it is to keep it in an accessible savings account or in investments with comparatively less volatile price movements such as short-term bonds or a money market fund. Conversely, think long-term for goals that are many years away. With time on your side, you do not have to go for investment “home runs” in order to be successful.
• Invest consistently and often
  Accumulate shares of stock or purchasing units in a unit trust fund at regular intervals over an extended time. Keep in mind that when the price is high, your investment buys less, when prices are low, you will often buy more shares/units.
  The long-term success of your portfolio will depend on periodically reviewing it. Even if nothing bad happens, your various investments will likely appreciate at different rates and your circumstances change over time – your asset allocation will need to reflect those changes. For example, as you get closer to retirement, you may increase your allocation to less volatile investments, or those that can provide a steady stream of income.

Adopted from NIC BANK website