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Investors generally look at their cash flow and after discounting for regular monthly expenses such as rent and EMI, they settle on a SIP amount.
Many investors fail to take into account one time expenses such as financing a school trip, insurance premiums.
Investors should write down their monthly as well as one time expenses when they calculate their cash flow. Decide on a minimum amount that you can comfortably commit to and fund for 5 years.
Don't decide on an amount where you struggle with SIP payment due to unexpected expenses. You can always increase later or invest as your cash flow increases.
The above examples are generally followed by a pool of IFAs. However, apart from the above I do suggest my clients to earmark the SIP per month based on their short term and Long term goals and ask them to follow this path. First start breaking investments among asset class Equity, Debt - Liquid and medium term. Upon salary credit let the investments flow and all expenses are not happening the same day so put the expense amount too in Monthly SIP in Liquid funds [ with Reliance ATM card Simply Save] . The rest will accordingly allocated to both medium and long term goals . The major benefit of this plan is that it prevents excess money being left out in low yielding Savings account and Customer is also in full control over his finances with technology [Simply Save & ATM card] .
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