Small investors are the centre of the market and most of them lack professional skills in trading and investment. A small or retail investor is one who invests very minimal amounts. However, the role of such investors is crucial in deciding the direction of the market given their numbers. The small amount invested by a plethora of retail investors makes up a huge amount of money for companies. Thus, they are a great source for raising capital as well.
Over the past 10 years, the interest of retail investors has touched heights. The number of Demat account holders in India has doubled and people are running towards the path of financial freedom by making their money work for them.
According to Arun Singh Tanwar, founder and CEO, Get Together Finance (GTF), the growth of the economy in the last few years is encouraging people to invest their money in secured stocks, mutual funds or other securities.
“This has given great results. In current times, more than 50 per cent of transactions in the exchange are of retail investors on a daily basis,” he said.
5 Tips For Financial Freedom
Speaking about the importance of financial freedom, Arun said, “It is something many people aspire for. Financial freedom happens when cash flows are sorted in a way that allows a person to get rid of daily 10 to 7 jobs and follow passion. If money is parked in the right schemes, even a small investor can make money.”
1. Debt: A person’s income is the most powerful wealth-building tool. Invest a portion of your money from your salary in the right place. Arun said that it is nearly impossible to reach financial goals with debt, so “get debt out of your life at the earliest is key to achieving financial freedom”.
2. Emergency Fund: Save money for emergencies. It is essential to have a fully funded emergency fund if the goal is to achieve financial freedom. An emergency fund acts as a buffer to meet unexpected life events. An emergency fund will help in keeping financial goals untouched.
3. Insurance: Have the right insurance cover in place for yourself and your family. Having the right insurance is the defensive strategy that protects your savings. While investing is key to achieving financial freedom, the right insurance helps an investor to stay on the path to financial stability.
4. Track Spending: Having a track of spending is another important step toward financial freedom. This makes a person more accountable, he said, adding that it also helps in identifying many needless expenses. Any impulsive buying can deviate a person from the path to financial freedom.
5. Passive Income: Look for an alternative source of income to boost your investment in the right tools to make that surplus money work in your favour. Arun said that the right investing makes the path to financial freedom easier. “Investing has become easier in current times than ever. A salaried person has multiple opportunities to grab. Having long-term goals play a crucial role in building wealth.”