Some of us have reached a point in our life where we are earning a steady, reasonably large income. Our savings have started growing at a steady pace. This is a point when most of us ask \u201cWhat should I do with this surplus money?\u201d It\u2019s not a very good question because most of us are likely to answer by either giving in to things that give us instant gratification (e.g. buy a bigger car, foreign trip) or social pressures (e.g. buy a house). And if we avoid these options, we end up putting the money in FD or mutual funds as a stop-gap solution before we find out what we really want to do with our money.<\/p>\n
The empowering question to ask is \u2018How should I manage my surplus money?\u2019 And the answer should be \u201cI must manage my surplus money in such a way that I\u00a0 meet most if not all of what I may be required to do and many of the things that I wish to do; without having to work for it.\u201d That\u2019s right; good investment planning helps grow your savings so that it becomes large enough for you to be able to afford these things without having to work for it. Isn\u2019t this what you would want in your life? You may still work, but it will be your choice. This is called Financial Freedom. Right now most of us are not there (else you won\u2019t be reading this); we need to work to meet our current and future needs. But we can get there by managing our money, by investing it in a way that it grows into a large enough corpus to fund our needs and at least a few of our wants\/dreams\/luxuries.<\/p>\n
The obvious benefit of thinking like this is that you know there are multiple things claiming a share of your savings; that you need to prioritize them and plan how to meet most of them.<\/p>\n
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<\/a>Your first reaction may be that it\u2019s not possible; that you don\u2019t and won\u2019t have the money to meet this goal of financial freedom. \u00a0Well, let\u2019s just say that if you have time on your side you are very likely to have the money you need to be provided you allow the magic of compounding to work for you.<\/p>\n