Hi, This is Salik, and in this post we will talk about Financial Freedom. Please comment your suggestions. it will be appriciated.
Financial
Freedom should be the first milestone of anyone towards happy life. it means
you don’t have to work in by force; but by choice. You don’t have to do job for
your kitchen but you choose profession of your own will and you can retire whenever you want.
First
step in financial freedom is to have multiple sources of income. Like you have
to create multiple income streams, you can have house that give rent. You may
have some business and day job. But you should have multiple income stream.
2nd
step is once you have the multiple income streams, prepare your reserve fund.
This fund is for your emergencies. It should have contains your all expenses
for atleast six months.
3rd
step is the safety for your self, make insurance for yourself or medical
insurance. Incase you have any accident or mishap, it should cover for you.
4th
step is to start investment. Once you have multiple oncome streams and you have
your reserve fund and insurance then you should start the investments. There
are many ventures that you do the investing. Below are some investment ventures
1.
Mutual Funds
2.
Stocks
3.
ETFs
4.
REITs
5.
Bank Investment Plans
6.
Investment in Business
7.
Investment in Farming
8.
Investment is Agriculture
1. Mutual Funds
Mutual Fund is the first investment venture
that anyone can try. It can be done by Banks. In Pakistan Meezan Bank provides
many good options for Mutual Funds. Average return per year in Mutual funds is
10%
2. Stocks
Stocks can be risky but it gives good
return. A good investor can get as much as 40% return per year from Stock
Market. But stocks are risky and selection of stocks requires knowledge and
intuition
3. ETFs
ETF are exchange traded Funds that you can think like a
basket of Stocks in Stock Market. This is fund created by some of the Finance
companies or bank, form this fund they purchase and sale the Stocks. And their
NET ASSET VALUE (NAV) is considered in Stock Market. So once you Purchased an
ETF you will own all stocks that are included in this ETF.
4. REITs
REITs are REAL ESTATE INVESTMENT TRUST, as name implies this is the fund
created by investment companies to invest in Property. They Purchase property
from this fund and they give dividend from the Rental Income of Fund
5. Bank
Investment Plans
These are investment Policies in which bank or company invest on the
behalf of you and give you a lumpsum amount at the end of the period, EFU is an
example of such company, they provide you the insurance policy [Takaful] and
invest money on behalf of you. Usually return is 8-12%
6. Investment in
Business
Investment in anyone business is good opportunity but the main risk in
this type is credibility of person in which you are investing. You can get
undetermined returns, upto 50% is achievable, but this type is risky.
7. Farming
One can invest in farming, purchase cows. Hire someone to take care of
animals. Sale their dairy products and cover the expenses. It can give you your
own dairy products or meat
8. Agriculture
Hire someone to prepare land and do all the job. There is initial
investment required for land on lease and initial costing for sowing the seeds.
But there are 2 seasons in year for Crop. One season you invest and the sale of
crop covers the expenses for next season and sale of 2nd season is
your profit. Usually profit is around 70-80% per year.
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