Investment Guide for First Jobers

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11 May 2021

Investment Guide for First Jobers

Compiled By: Ashish Goyal, Co-Founder and CFO at EarlySalary
About Ashish: As CFO, Ashish oversees the overall strategic direction of the company and focuses on building the funding profile to ensure that it is diverse and deep. In this role, he is responsible for building EarlySalary’s business, strengthening EarlySalary’s position. He oversees the integration of EarlySalary’s overall growth strategy with Co-Founder Akshay Mehrotra.

The first job is the first chapter of our career that not only gives you economic independence, but it also teaches you to be more responsible for your family’s needs and your own goals. To be on the road to financial wellness, it’s a good idea to start planning about how you can invest your salary. Here’s how you can do it:

Focus on Enhancing Earning potential

As a principle, focus on how to increase earning than focus on spending curbs. When we focus on earning, we generate compounding of permanent increase in annual income potential. Go for that skill upgrade training, take that complex project at office!. Needless to say, be passionate in what you do. In today’s world, keeping pace with technology change is absolutely essential to remain relevant. 

Similarly, in order to invest efficiently, it is highly important to have a good stable source(s) of income that allows you to stay in a financially secure position.  It is imperative to invest for long term. In today world, one need to take SIP option to build continuous allocation of funds towards saving and in right asset classes.   

There is an old adage that “not taking risk is the biggest risk”.

Invest in Skills

Going down a swift river without any direction, guide, or awareness of what’s around the next turn is a similar analogy of not investing in yourself, but with more negative consequences in life  Things could go well for a while, but you’ll eventually remember you made the wrong decision by not investing in your skillset. You must make a strategic and diligent investment in a roadmap for achieving your career goals in order to prevent unforeseeable incidents to happen. 

One of the most effective ways to advance your career is to actively develop your skill set. Being able to demonstrate fresh, creative ideas would make you more productive at your current job. Read more books, listen to people who inspire you, build a healthy routine and always keep learning and enhancing your skills! A simple trick to achieve this. Just like we do corporate planning and review, Block 2 hours on 1st of every month to plan and review your long term objective. Assess whether you are on the right path to achieve full potential or it need some change

Spend less than income

The most essential personal finance rule is to spend less than you make. It’s plain and straightforward: the only way to accumulate wealth is to have an abundance of money. Save money, be careful with finances, avoid debt, and avoid doing something careless with your financial resources. But remember, Focus on increasing income potential and then spend less. Other way round will just put us in a mediocre outcome. 

In no way, you should compromise on your life style, ambition to own something however, use rising income to support it. How can your income be 5 times is the most critical question one needs to ask regularly

The amount of value an individual produces determines his or her income. Your earnings are directly proportional to the amount of value you generate. You can’t win consistently if you don’t work hard, but working smart is also important. 

You can save a lot of time by working smart instead of doing extra work that yields marginal outcomes. The scalability factor is vital; it distinguishes the wealthy from the ultra-wealthy. Hence, make sure you question yourself frequently about what you can do to multiply your income and work upon it!

Start SIP in an equity mutual fund early in your career

SIPs, or systematic investment plans, protect you from a variety of risks. Short-span risks,  uncertainty, irrational and reckless responses, overspending, and so on are a few of them.You don’t have to think about timing your investment when you invest in a SIP strategy. When market conditions are favourable, your monthly SIP purchases fewer mutual fund units. 

When the markets are down, a monthly SIP of the same volume earns you more units. As a result, you do not pay very high prices for any unit of a mutual fund in the long run. SIP plans are one of the best and most effective ways to invest money in Indian equity markets.

Have experiences

Experience allows you to live life with memories.  In today’s world, you no longer need to buy things to experience it. I recommend that on high ticket purchases, we should carefully evaluate “why and do I need to buy it”. If it is for experience, you can find a deal to fulfill it without owning it up. 

Also, when you live to experience, Your personality is made up of the places you’ve been, the lessons you’ve learned, and the experiences you’ve had, rather than your belongings. Purchasing a new item will not change your life, but travelling and living in a foreign country will.

Buy Critical Illness Policy

Critical illness insurance offers extra protection in the event of a medical emergency. Since these situations sometimes result in higher-than-average medical expenses, plans pay out cash to help cover the gaps where conventional health benefits can fall short. These plans are reasonably priced. 

We need to set long-term agendas for our lives, just as we do for our days. Financial objectives involve preparation, and the sooner you begin, the better. Bagging the first job is a milestone achieved. It is the start of a successful career and places you in a real, raw world setting. 

In sum, rule 1 is always looking to enhance income potential. Rule 2, focus on income, not on spend BUT, always spend less than income on that day. 

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