Diwali is a time when one can spend more money and have fun. Most of us seek more money every time we spend an additional rupee. Giving less and getting more is the mantra of most millennials. We should also apply this mantra to our money matters now. Here are five small changes that you can make to make positive changes to your personal finances.

Invest for a slightly longer time period

By investing for a little longer, you let compounding play in your favour. The longer time frame you keep, the better off you are. Although you do not have control on the rate of return, you can choose to remain invested for a longer period of time. This will help accumulate wealth.

For example, if you aim to invest Rs 10,000 at the beginning of each month at a yearly rate of return of 12 percent for 15 years, then you are expected to take home Rs 47.59 lakh. Instead if you invest for one more year, you will take home Rs 54.58 lakh – that is 14.6 percent or Rs 6.98 lakh more by investing just Rs 12,000 more and allowing your corpus to remain invested for one more year.

“The magic of compounding works hard for you when you are willing to invest for longer period of time. Over a period of time, you may invest small amounts. But your existing investments keep earning returns that add to your wealth,” said Kiran Telang, founder of Dhanayush Capital Advisors.

Investing bit more amount of money

In the example mentioned above, if you increase the monthly investment by Rs 1,000 per month – that is Rs 11,000 per month, you will accumulate Rs 52.35 lakh over 15 years.

If you decide to increase the monthly SIP amount by Rs 1,000 each year then you will accumulate Rs 69.43 lakh. It is akin to adding fodder to fire – in good sense. Most of us want our income to increase each year. The good thing is with rise in income if our lifestyle does not increase in the same proportion, we see a lot of saving.

Increase in income over and above inflation should translate into saving as much as possible. More important, these savings if channelized into the right investment then it can accumulate large corpus over long period of time.

Small premium for only risk covers

Best of the plans need to be executed. However, it is not bounding on life to give each one of us enough time to execute what was planned. The unfortunate few meet with accidents, fall seriously ill and some do not live to see financial goals achieved. Insurance comes into play in such circumstances. Insurance is all about risk management and not investments. If you buy pure risk products such as term life insurance, personal accident insurance and health insurance you will protect your financial interests at minimal cost. It ensures that one’s financial goals are achieved even if he or she is not around.

Cutting a percentage point on rate of interest payable

This could appear really stupid for many. But a percentage point saved on rate of interest payable can save you big money. Consider a home loan of Rs 50 lakh for 20 years at the rate of interest of 10%. Here you pay an EMI of Rs 48251 per month and you pay a sum of Rs 65.80 lakh towards interest over the tenure assuming the rate does not change. But if you can negotiate the rate to 9% – just a percentage point less, then your EMI works out to Rs 44986 which means you pay Rs 57.96 lakh towards interest. That is saving of Rs 7.83 lakh. Does that mean a change of a percentage point in rate of interest over 20 years costs you a nice hatchback?

“If you see the interest rates going down and the bank is not willing to pass it on to you, better ask for a rate cut,” says Kiran Telang.

Being a bit more attentive with your money

If you have read so far, then it shows that you are serious with your money matters. You are not one of those for whom money matters become important only when it is time to save income tax and while filing income tax returns. But if you are one of them, it is time to be serious. Give some more time to your investments and liabilities. Do maintain your portfolio . You should review your portfolio thoroughly at least twice a year. Keep track of your portfolio on ongoing basis. Go for corrective actions wherever necessary. Do check if you can invest more for a better future.

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