10 financial tips for people in 30s for a stress-free future

Hoarding cash in your bank accounts to secure a safe future is a thing of the past. The returns from your bank accounts are far less than you will earn from investing money in bonds, FDs, stock market, SIPs and mutual funds among others.

Investing is key for those who want to become financially independent in the future. Investing in these options is not enough, you will have to monitor the progress of investments and stay invested in the long term. Here's a list of advice from financial experts around the world on how to invest, spend and save better in the prime of your life.

1. Keep things simple, don't fall for quick profits – According to legendary investor Warren Buffett, one must invest in places one knows best. He was quoted as saying, "If you don't invest in things you know, you're just gambling." Elaborating on the same, in the 2014 letter to his shareholders, he had said, "You don't need to be an expert in order to achieve satisfactory investment returns.But if you aren't, you must recognise your limitations and follow a course certain to work reasonably well. Keep things simple and don't swing for the fences." To those lured by quick gains, this is what Buffett has to say: "When promised with quick profits, respond with a quick 'no'."
2. The 'rich and poor' philosophy – A popular perception in financial planning is that we need to save a little after all the spending and invest that little saving. Robert Kiyosaki, American author of the book Rich Dad, Poor Dad, believes otherwise. "The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left," he says.
3. The frugality approach – When overcome with guilt at the end of the month for spending too much on that watch you loved or the new iPhone you absolutely had to pocket, you make idealistic promises to cut down spending on 'frivolous' things.
4. Limit your borrowing – Credit cards can be alluring. Borrowing money that is unaffordable now somehow becomes affordable in a couple of months. Here's what Warren Buffett says about the practice of borrowing: "I've seen more people fail because of liquor and leverage – leverage being borrowed money. You really don't need leverage in this world much. If you're smart, you're going to make a lot of money without borrowing."
5. Make a plan – We spend a lot in a certain month, curb spending in the next to make up for it, and end up in a vicious cycle of debt and little savings. Make a simple expenditure plan as well as an investment plan without delay. Don't keep pushing it to the next month or believe that this month it's going to be different.
6. Invest for the long term – If you keep going in and out of the market, because of upheavals in the market, you may stand to lose. You must have a long-term view and invest in an asset class that thrives in a period of market upturn.
7. SIPs take away the human bias – A systematic investment plan (SIP) is something experts harp on. It is believed to be a disciplined form of investment. Sundeep Sikka, CEO, Reliance Capital Asset Management, says, "SIP is the easiest way to create wealth. We are all aware of RDs – recurring deposits – in which a small amount that moves out of the bank account goes into a fixed deposit, month on month. It's very similar to that." Imagine a scenario where you've been investing Rs 10,000 a month for the last 15 years; your total investment would have added up to Rs 18 lakh by now – Rs 1,20,000 annually.Taking into consideration the volatility, your returns would now be Rs 55 lakh – a return in excess of almost 20 per cent. Sikka adds, "The beauty is, it's a small amount of money to invest every month. The advantage of SIP is that it gets discipline in your way of investing and also takes away the human bias of when to invest."
8. Reviewing your portfolio is as important as making one – A sound investment plan is nothing but matching your assets and liabilities, believes Abhishake Mathur, Head, Investment Advisory Services, ICICI Securities. This is how he defines a good financial plan: "Assets comprise all your investments and liabilities. A successful plan is one which ensures that you have the required assets at the required time to meet a goal, and that's why asset allocation is very important. Classifying goals into critical and discretionary helps one make a sharper plan. However, one must understand that making a financial plan is not enough. It is even more important to review it regularly and stick with the plan. The whole purpose of planning is to come off personal biases and invest rationally."
9. Do your homework – While there are financial advisors to fall back on, it is easy to gather knowledge of your own in this internet age. Before you invest, find out about the industry you're investing in, the company you want to buy stocks from and the general market conditions at the time of investing. As the big bull of Dalal Street Rakesh Jhunjhunwala once said, "Markets are about money, but markets are also about knowledge. Markets are about egos; markets are also about the satisfaction of having been proved right, especially when that right is from an original thought and not from a guided source."
10. The answer lies with you – As an extension of the previous point, it is important to note that nobody can truly understand your goals and financial needs. If the question 'how should I pick the right scheme?' ever occurs to you, the answer is simple – it lies with you. Dhirendra Kumar, CEO, Value Research, believes that before entering the market, one must ascertain how long one intends to stay.

He advises to not bother with long-term funds if one intends to invest for a couple of weeks. "Only the money that you are unlikely to need for many years should find its way into long-term savings vehicles. That's the first thing to ask and that answer lies with you. Similarly, your child's education on a given date is a non-negotiable goal.

But, buying a house in the next three to four years can be negotiated a little bit. These answers lie with the individuals," he says.