Here is an attempt to present a complex subject (Personal Finance Management in simplest way without compromising on the core of the subject matter. Vast subject condensed to 4 Steps and further represented in one-page picture. Step-1: Create Emergency Fund and Get Insurance Covers Creating an Emergency Reserve Fund of at least your 3 months Salary / Income is your First Objective, as soon you start earning. Thereafter, it needs to maintained at that level in line with increase in your income. It needs to be recouped as soon as possible, when it gets used up. The reason why you should ever touch this money for spending is strictly an Emergency Situation (Ex: Medical Emergency, Loss of Job etc). This emergency Fund may be parked in a instrument that is quickly liquidatable; Investing in Bank Fixed Deposits and Mutu Fund Liquid Funds is most appropriate. Insurance is a next sub-step; A well rounded Insurance covers against untimely death (Term Insurance), Accidental Disab
Who and when should one invest / consider investing in Equity Shares directly than investing in Equity Mutual Funds? Investing in Equity Mutual Funds for all Long Term Goals is the simplest and the easiest way. Some argue, investing in Equity as an asset class and not necessarily Equity Mutual Funds for Long Term Goals. However, that may be suitable only for the those who wish invest with dedication, on time and knowledge to learn and master Direct Equity Investing. If you are one of those who is willing to dedicate to patient & continuous learning, research & analysis, you may look for Direct Investing in Equity Shares. Be a long term investor and not a trader. Learn to create a focused portfolio of select few high quality stocks, that you expect to be multi-baggers (increase in value multi-fold) over long term. As this is difficult task and involves far higher risk than Investing in Equity Mutual Funds, don’t use it for funding your regular / time bound goals. Don’t in