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  • Rohit Musale, CFA

The 3 Simple Steps to Start Investing Your Money

In this post, I want to discuss the three basic steps you can take, right now, to start investing your money.

So here they are:

1) Save

Yes, start saving atleast 10% of your monthly income, every single month.

Now, you might say, Rohit, that is very obvious.

Yes, it is.

But try doing it in real life.

It sounds very simple and obvious.

But it takes tremendous amount of discipline to implement this in real life.

Ask yourself this important question:

"If I would have saved 10% of my monthly income, each month, ever since the day I started earning and had not touched that amount ever. How much would I have had, right now?"

Let me repeat that question.

It's a very important question.

Ask yourself:

"If I would have saved 10% of my monthly income, each month, ever since the day I started earning and had not touched that amount ever. How much would I have had, right now?"

When you honestly answer that question, you will find out how big that amount is.

And it would have served you well, if you would have had that amount right now, with you.

So do not underestimate the power of this seemingly simple looking principle.

This is also one of the most important concepts mentioned in the greatest personal finance book of all time, 'The Richest Man in Babylon'.

I strongly recommend that you read that book, if you are genuinely interested in taking 100% control of your own financial life.

So start putting aside 10% each month.

Keep it in a bank account that is separate from your primary income account, like your salary account or your business account.

Once you put this 10% aside, don't you ever touch that money to meet your expenses.

Alright, let's move on to step number two.

2) Invest

Now that you have started saving 10% each month, you need to start investing this money somewhere.

You can't keep it idle, right?

Because idle cash keeps losing value.

Currency is designed to lose value.

Now the next question is, where should you invest this money?

For now, it really does not matter.

You can choose to put it in a fixed deposit, or precious metals like gold or silver or mutual funds.

It really does not matter.

What truly matters is this: you have atleast begun on your investing journey.

Kim Kiyosaki, author of the book, 'The Rich Woman', says that, when you start investing in something, you automatically get curious about it.

And you will start to learn, because now, you have money at stake, right ?

So the learning will automatically happen as you begin investing in different asset classes.

Here is a quick tip.

If you have no finance background, or you don't know anything about investments, it makes sense to get help from an investment advisor.

Atleast you wouldn't have to spend the time trying to choose which mutual funds are the best for you.

For fixed deposits, gold and silver, you can do it on your own, but when it comes to regularly investing in mutual funds, you will need some guidance and support there.

Moreover, investing in a mutual fund is like hiring a professional to manage your money.

Your investment advisor will help you choose the funds that are best suited to help you achieve your financial goals.

Again, the important point here is: you have to begin somewhere.

Investing in mutual funds is like outsourcing your money management to a professional.

You could of course choose to skip mutual funds altogether and put this amount in fixed deposits or precious metals, no problem.

But atleast you are beginning to build your financial portfolio.

That's very important.

So start investing your money every single month, consistently.

Alright, let's move on to step number three.

3) Monitor

This is the most important step.

You have to monitor your investments regularly.

Just starting a systematic investment plan doesn't mean that you are done with your investments.

You have to keep an eye on your financial portfolio.

I recommend reviewing your portfolio atleast once in a quarter and not more than that.

That is four times a year, which is more than enough.

So make sure you sit with your investment advisor once every quarter and check what is happening.

Keep on top of things.

Don't just set it and forget it.

That doesn't work in investing.

You must take full responsibility of your investments.

Use this meeting to ask questions that will enhance your investment knowledge.

Try to make changes to the portfolio that can help grow the portfolio faster.

Make sure you monitor your portfolio regularly and keep improving on your investment decisions.

So there you are.

Easy and simple.

Just three simple steps to start your investment journey.

Save, Invest, Monitor.

You can either choose to do this on your own, or hire an investment advisor to do it for you.

If you decide to do it on your own, you will need some investment education before you actually start investing your money.

Does it not make sense to understand the game that you are getting into?


Rohit Musale, CFA

15 December 2022


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