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Why Invest, How to Invest, What to Invest in

Why Should You Invest?

Because it'll help you pursue your dreams and free you from financial worries.

How Can you Invest?

You need to save 25% of your income each month. Make a minimal budget and automate the transfer of 25% of your after-tax income to a separate savings account. Thus 25% of your income gets converted into 100% of your savings each month.

First pay off your debts aggressively. Pause your lifestyle improvements at this stage.
Then you should invest in a diversified portfolio. Diversified but not spread too thin.

What Should you Invest in?

(a) Direct 70% of the savings to a bluechip mutual fund or an index fund. Keep doing this for 25 years. Use a systematic investment plan if available. You want to make this process automated so that you are not tempted to reduce your savings when the market undergoes a prolonged drawdown.
(b) Deposit 25% of savings into a safe investment (for example, treasury bonds or fixed bank deposits).
(c) Use the rest (5%) to buy gold or gold ETFs.

You should pause (b) and (c) till you save up for an emergency fund and an opportunity fund. You can invest in real estate if you are a high net worth and can withstand the associated illiquidity.

That's it! Stick to these strategies for 25–35 years and let compound interest do its thing.

“The first rule of compounding: Never interrupt it unnecessarily.”

— Charlie Munger


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