Why a second income is important! Why you have to start now!
In today’s world of uncertainty a secondary income is definitely a necessity that could come to anyone’s rescue during period of emergency or to take care of future financial needs. Most of us at some point or the other would have told ourselves: “how I wish my income was higher!”. The most attractive proposition is the ability to atleast get closer to the ambition of being “financially free” at some point of time. Why just dream about it? In this post, I agree that a secondary source of income is important for most of us and why we need to start now.
Most people aspire for financial freedom at a much younger age rather than waiting for their retirement. To achieve financial freedom much earlier before retirement, you have to develop two or more streams of secondary income in addition to one’s salary (or other primary source of income). It will keep us busy and not pester our spouse or children after retirement–something we can wake up to do.
One can always do something for free to keep busy, but it will not suit everyone money is a good stimulant for many. Hopefully, such an engagement will keep us healthy.
Identifying Avenues for Secondary Income
This is easier said than done because the avenues open to you depends on your skills, interests and opportunities available to you in the market.
So there is no standard formula or checklist I can give that can suit everyone. However, if we look at what avenues are available and how people have tapped them we can get good ideas and inspirations for ourselves.
One of the avenue you can tap in to for secondary source of income include: –
Investment in Equities & Fixed Income avenues
Equity investment should start as early as when you get your first job and needs to be done systematically through systematic investment plans. For people who don’t want to be managing multiple funds I would recommend investing via ETF.
Investing in Nifty ETF is one of the smartest strategies provided you have moderate risk and return expectations and like to invest for medium to long term. For the most savvy investors who like to dabble in stocks there are plenty of strong, reputed companies in the index that one can choose from. However, I am not recommending trading stocks – be it intra day trading or positional trading.
Mutual funds can be used to meet a variety of financial goals. For example:
- A young investor with a stable income and many years to invest may feel comfortable taking more risk to achieve greater potential return. They may invest in an equity fund.
- A mid-career investor trying to balance risk and return more moderately could invest in a balanced mutual fund that buy a mix of stocks and bonds.
- An investor approaching retirement might be less comfortable with risk and more interested in fixed income investments. They may invest in a bond fund.
Many people borrow to trade or invest in IPOs which is similar to a time bomb waiting to blow up. Trading and leverage are not recommended for investors, however knowledgeable you may be. The only exception if where you have prior knowledge and experience and like to set up your own trading business.
Mutual Fund is a great convenience for those who need to invest their money for future requirements. A team of professionals manages the money and the investors can enjoy the fruits of this expertise without getting involved in the mundane tasks.
Mutual Funds Sahi Hai