<p>In the last few years, consolidation of financial services, availability of near-instant financial solutions, and rise of customer-focused services have radically transformed how India views personal finance. </p>.<p>The current financial landscape is highly dynamic. And if you’re looking to transform your future and achieve financial independence, there is no better time than now.</p>.<p>However, to attain this goal, you need to develop some of these financial habits: </p>.<p class="CrossHead Rag"><strong>Track your expenses and automate your savings</strong></p>.<p>Technology integration in the financial services sector has revolutionised personal finance in many ways. However, many investors are still not leveraging technology to save more diligently for their future. Today, we have several apps available to help us monitor our expenses and automate our savings to bring in more discipline. </p>.<p>Your expenses make up a crucial part of your budget. If you don’t keep an eye on your outlays, they may quickly shoot up and cover most or all of your earnings. Building long-term wealth requires living within your means, and tracking your expenses helps you achieve that. Categorise your expenses as essential or discretionary, and then work towards minimising your discretionary spending as much as possible. Efficient management of outflows will leave you more funds to save and invest in your future.</p>.<p>Technology also helps automate your savings, so a part of your income is automatically redirected every month to your savings account. This way, you can prioritise saving up for the long term rather than spending on your non-essential needs.</p>.<p class="CrossHead"><strong>Leverage equity investments</strong></p>.<p>Many beginner investors tend to shy away from investing in equities because of the high risk involved. But investment in equities is imperative for long-term wealth creation. Equities are the best-performing asset class in the long run, with a track record of delivering inflation-beating returns. You can always invest in equities via professionally managed mutual funds to minimise risks and maximise returns.</p>.<p class="CrossHead Rag"><strong>Start a SIP</strong></p>.<p>Investments need not always be in lump sum amounts. You can start investing for your future even with as little as Rs 500 a month. A Systematic Investment Plan (SIP) makes this possible. You can use a SIP to invest in the stock market or mutual funds, be it debt, equity, index, or others. A SIP also gives you the advantage of compounding and rupee cost averaging, so your returns are compounded and your investment costs reduced over time. For example, if you invest Rs 5,000 monthly at 10% per annum for 10 years, the sum invested would be Rs. 6,00,000, but at the end of this period, your investments will grow to Rs. 10,32,760, all thanks to compounding.</p>.<p class="CrossHead Rag"><strong>Diversify </strong></p>.<p>Another essential financial practice that can have significant long terms benefits is portfolio diversification. You may start by investing in just one kind of asset. However, it is crucial to diversify your portfolio as your earning capacity improves and you can increase the size of your investment. Diversification is important because it reduces the overall risk in your portfolio. If you invest all your savings in just one asset, the risk of capital erosion is high if it does not perform as expected. </p>.<p class="CrossHead Rag"><strong>Pay your debts on time</strong></p>.<p>While many people get around to prioritising investments, they often overlook the importance of limiting the debt in their portfolio. If you make this costly mistake, your debt repayments could take up most or all of your earnings, leaving you with little to invest. So, it is essential to prioritise debt repayments, particularly if you have high-interest loans.</p>.<p>Additionally, prompt and timely repayments also have the advantage of building up your credit score, which will reflect positively on your financial persona. It can also be beneficial for your financial future if you need to avail of credit facilities, like a home loan, to increase your asset holdings.</p>.<p class="CrossHead Rag"><strong>Conclusion</strong></p>.<p>These five financial habits are only some of the many techniques that can get you closer to your dream of financially securing your future. Incorporate them into your financial plan and follow them diligently. If you face any challenge in sticking to these practices you could always approach a financial expert for assistance.</p>.<p><span class="italic">(<em>The writer is the managing director and chief executive officer of Axis Securities</em>)</span></p>
<p>In the last few years, consolidation of financial services, availability of near-instant financial solutions, and rise of customer-focused services have radically transformed how India views personal finance. </p>.<p>The current financial landscape is highly dynamic. And if you’re looking to transform your future and achieve financial independence, there is no better time than now.</p>.<p>However, to attain this goal, you need to develop some of these financial habits: </p>.<p class="CrossHead Rag"><strong>Track your expenses and automate your savings</strong></p>.<p>Technology integration in the financial services sector has revolutionised personal finance in many ways. However, many investors are still not leveraging technology to save more diligently for their future. Today, we have several apps available to help us monitor our expenses and automate our savings to bring in more discipline. </p>.<p>Your expenses make up a crucial part of your budget. If you don’t keep an eye on your outlays, they may quickly shoot up and cover most or all of your earnings. Building long-term wealth requires living within your means, and tracking your expenses helps you achieve that. Categorise your expenses as essential or discretionary, and then work towards minimising your discretionary spending as much as possible. Efficient management of outflows will leave you more funds to save and invest in your future.</p>.<p>Technology also helps automate your savings, so a part of your income is automatically redirected every month to your savings account. This way, you can prioritise saving up for the long term rather than spending on your non-essential needs.</p>.<p class="CrossHead"><strong>Leverage equity investments</strong></p>.<p>Many beginner investors tend to shy away from investing in equities because of the high risk involved. But investment in equities is imperative for long-term wealth creation. Equities are the best-performing asset class in the long run, with a track record of delivering inflation-beating returns. You can always invest in equities via professionally managed mutual funds to minimise risks and maximise returns.</p>.<p class="CrossHead Rag"><strong>Start a SIP</strong></p>.<p>Investments need not always be in lump sum amounts. You can start investing for your future even with as little as Rs 500 a month. A Systematic Investment Plan (SIP) makes this possible. You can use a SIP to invest in the stock market or mutual funds, be it debt, equity, index, or others. A SIP also gives you the advantage of compounding and rupee cost averaging, so your returns are compounded and your investment costs reduced over time. For example, if you invest Rs 5,000 monthly at 10% per annum for 10 years, the sum invested would be Rs. 6,00,000, but at the end of this period, your investments will grow to Rs. 10,32,760, all thanks to compounding.</p>.<p class="CrossHead Rag"><strong>Diversify </strong></p>.<p>Another essential financial practice that can have significant long terms benefits is portfolio diversification. You may start by investing in just one kind of asset. However, it is crucial to diversify your portfolio as your earning capacity improves and you can increase the size of your investment. Diversification is important because it reduces the overall risk in your portfolio. If you invest all your savings in just one asset, the risk of capital erosion is high if it does not perform as expected. </p>.<p class="CrossHead Rag"><strong>Pay your debts on time</strong></p>.<p>While many people get around to prioritising investments, they often overlook the importance of limiting the debt in their portfolio. If you make this costly mistake, your debt repayments could take up most or all of your earnings, leaving you with little to invest. So, it is essential to prioritise debt repayments, particularly if you have high-interest loans.</p>.<p>Additionally, prompt and timely repayments also have the advantage of building up your credit score, which will reflect positively on your financial persona. It can also be beneficial for your financial future if you need to avail of credit facilities, like a home loan, to increase your asset holdings.</p>.<p class="CrossHead Rag"><strong>Conclusion</strong></p>.<p>These five financial habits are only some of the many techniques that can get you closer to your dream of financially securing your future. Incorporate them into your financial plan and follow them diligently. If you face any challenge in sticking to these practices you could always approach a financial expert for assistance.</p>.<p><span class="italic">(<em>The writer is the managing director and chief executive officer of Axis Securities</em>)</span></p>