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Investing as a Family – Here’s How To Begin

To get started with family investments, you need to make a list of goals you want to invest towards. These will create different funds that can be utilised for your family needs when those moments arrive. This might be your first time as an investor. Worry not for it is always a good time to start investing – be it as a collective unit or individually. However, if you are investing as a family, there will be some added responsibilities. 

You can follow a few pro tips so as not to get confused when you have more than one investment to deal with. 

Separate Investments From Savings 

Investments are a lot like savings. We invest or save money for future use. But investments are a better method of securing your future because, unlike your savings, investments can generate more wealth by themselves. Thus, to enjoy the blessings of compounding, you are advised to separate your savings and investment.

This means that you are required to not mix them up. It also means that you can have separate saving goals and investment goals. List down your saving goals and investment goals so that you do not lose sight of them. Keeping track of this will also help you decide how much money you can afford to invest depending on your income and expenditures. 

Fixing Your Investment Goals

Once you can tell your investments apart from your savings, the next step is to compartmentalise your investments. Like savings, investments must also be divided according to different financial goals. That is to say, do not put all your money in one place with just one goal in mind.

Divide your priorities and list them down. It is advisable to separate your personal financial goals from your family goals. Your investments can be directed towards creating funds for emergencies, healthcare, childcare, education, housing, retirement and so on. These are the common needs of a family unit but you might have special requirements. Prepare your list of priorities accordingly. 

Creating Diverse Investments 

Simply compartmentalising your investments is not enough; you are also required to diversify your investments. The trick is to invest in different places instead of investing in the same company stock or fund. 

You must remember that, as a family, your investment goals can be quite distinct and miscellaneous. They vary not only in terms of the time you can give for the money to grow but also in terms of the amount you can invest in the first place. There are other factors like the level of risk involved and the percentage of returns you will enjoy in the long run. There are various kinds of mutual fund schemes you can opt for – large-cap equity funds, small-cap equity funds, mid-cap funds, debt funds, taxing saving schemes and so on. 

When you diversify investments, you play safe by ensuring that if you incur a loss on one investment, it will be balanced by the profits earned on another. Moreover, you can invest in International Equity funds to satiate goals like your child’s education abroad. This will ensure that you do not get affected by the market fluctuations of the Indian stock market. Also, your returns will have more value because a foreign currency like the US dollar is more stable.

Bottom Line

When you make investment decisions as a family, your kids learn from you. Thus, as a financial role model, your responsibility increases. As a married person, sharing investment goals with your partner as well as having separate individual funds is an example of healthy investing. This is the most organised way to make sure that one fund does not get compromised to fulfil a goal it was not originally meant for. 

Similarly, try not to use up your life savings or retirement fund to send your kids abroad for a college education. Only prior well-planned investments can prevent such bewilderment from occurring. Investing systematically also means zero stress in your retirement life. Consult a financial expert if necessary. Start today with the EduFund app.

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