Many investors often ask, “I have some surplus cash. Where should I park it?”; “Can I park my surplus cash in my SBI Max Gain account?”; “Is this market dip a good time to deploy my surplus cash?”.
Almost always, digging deeper reveals it to be a case of bad planning. The first question to ask here is, how did you end up with surplus cash in the first place?
A proper financial planning process considers our income, monthly expenses, EMIs, annual expenses, recurring goals, short-term goals and long-term goals. It then distributes our current investments and future investible surplus to achieve these goals.
Once this exercise is done and the recommendations are implemented, a “surplus” is not possible unless a person has enormous assets. And such a person will have better things to do than worry about buying on dips with that surplus.
And once there is no surplus, there is no confusion! Buy a normal home loan and keep things simple! Invest systematically without wasting time and money by hoarding cash and waiting for the right time. Having a surplus is almost always due to poor planning.
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If you have not yet done this, you can use these resources:
- Download A Personal Finance Self-Evaluation Checklist. This personal financial self-evaluation checklist can be used by beginners and veterans alike. It has been developed from how to Conduct a Personal Financial Audit and my audits each December.
- A beginner’s guide to retirement planning. We simplify retirement planning into nine easy steps to help beginners start their journey.
- How to plan for a financial goal: A step-by-step guide. This article discusses the most crucial steps in defining and planning a financial goal. Only after the goal is defined should one consider products for investments. Sadly, most investors have a product-first, plan-later approach.
- Basics of portfolio construction: A video guide for beginners.
- Retirement plan review: Am I on track to retire by 50? A retirement planning example.