Insights

Are you earning enough?

July 1, 2017 . Aparna Hari

blogIndians are competitive, and honestly, we can’t be blamed for it. Right from the time we’re young, our parents compared us with the neighbour’s children to see if we are walking faster, talking better, scoring higher and more. The competitive spirit runs so deep in our DNA that we feel the urge to constantly reassure ourselves that we’re doing enough, if not better, than our peers at any given stage of life. And this habit does not change once we start earning.

Be it a CEO or a fresher, the tendency to keep track of industry payscale trends and peer comparison is something most of us are guilty of. The question, ‘Am I earning enough?’ can cause many a sleepless night, especially if you find out that you are on the left side of the comparative scale.

But what determines if you’re earning enough? Is it merely the amount that is credited to your bank account every month? That seems very limiting, as there are many non-monetary factors of a profession that may justify what you’re paid – passion for what you’re doing, prospective future growth, great boss, amicable workplace etc. And those are hard to fit into a worthiness equation.

So coming back to our fundamental question; are you earning enough? The answer lies in looking at ‘earning’ beyond what your job brings in for you (which tends to be relative), and making sure that what you earn also earns for you. In other words, you are truly earning enough, when your money is earning for you too. And that happens when you give due importance to the key component of ‘earning’, which is investing.

How does investing help you earn?

The fundamental function of investing is to help you earn more! When you invest your money in the right avenues, you are giving it the opportunity to multiply over time. Albert Einstein said that compounding is the eighth wonder of the world. Compounding, in simple words, is giving your money the gift of time to multiply and grow with you.

How do you know where to invest?

Selecting the right avenue to invest in is crucial. The best way to identify what’s best for you is by researching on it. Read and learn about the various avenues of investments that exist, and match those to your goals in life.

Having said that, one investment avenue you should consider is mutual funds. Mutual funds are great for investments, as they tend to deliver higher returns than other traditional investment options – helping you earn more! They also come with lesser risk compared to investing directly in equities, as you have the advantage of a professional fund manager taking care of your money, diversifying and investing it in the right instruments for best returns. The key though, is to pick the right fund. If research is not your cup of tea, and picking your own fund seems like too much work, your best bet is to find a good investment advisor who can help you pick the right mutual funds for you.

Shouldn’t you first save, before you start investing?

Not if you want to earn more! Investing, in fact, is in itself a great way of saving – especially when done systematically. Just like how your salary comes on time every month, you need to build your other salary with the same discipline. Confused? When you invest systematically every month, you’re actually building up a fantastic corpus which will start to pay you back, when your salary stops – when you retire (or want to begin your own start-up). Investing regularly ensures that while you earn every month, you’re also making your money earn every month. Just like slacking off at work can threaten your monthly salary today, slacking off on your monthly investments can threaten your retirement salary.

Systematic Investment Plans (SIPs) are a great way to ensure that you never miss your monthly investment. They can be automated, so that on a fixed day the money is automatically debited from your account and invested wisely. That way your salary today contributes to your future income too.

Is investing in mutual funds risky?

It can be, if you are not guided properly. Think about it. A poor mentor at work can make your career risky. A bad professor can make your education risky. Likewise, not having the right financial advisor, can make your investments risky. But when you have the right friend to guide you, investing can not only be easy, it can be highly rewarding too.

So the next time you wonder, ‘Are you earning enough?’, remember to look beyond your pay package, and at your investment portfolio. As long as you’re taking care of your future, and your money is working for you the best way it should be, you can relax – you’re definitely earning enough!

 

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