7 Timeless Rules About Money

A medium of exchange in an economy, one of the essential functions of money is to serve as a store of value, that is, of maintaining a stable and reliable standard of living. 

Money is vital in an individual’s life, it also provides power to form an immediate bridge from your past to your future.

While it has multiple functions in any society, it is essential in financing a wide range of activities in personal and professional life.

Dedicate time to understand money and build a strategy for financial goals as early as possible. There are certain Dos and Don’t which serve a financial plan in the long run.

Timeless rules about Money 

  1. Save money

The first rule for money is to save it, or in other words, pay yourself first.

Shopping and discretionary expenses should be in a balance with your financial goals. Pay for yourself first i.e. save money for your needs and goals. If you save and invest you can accumulate wealth for your future.

Start saving early to allow more time for your money to have more opportunities to grow. This is known as compounding. 

For example, you invest Rs. 1000 in an asset, and it generates a 10% return for you in the 1st year. After 1st year your investment + return will be = 1000 + (1000*10%) = Rs. 1,100. In the second year, it also generates a 10% return. The investment value after 2 years will be 1,100+1,100*10% = Rs. 1,210.

It is also recommended that one should spend what is left after saving.

  1. Never rely on only one source of Income

“Never depend on a single income. Make investment to create a second source.” – Warren Buffett.

Portfolio planning involves diversifying capital into various assets. 

Similarly, it is advised that you should not rely on only one source of income. To create a contingency source of inflow, develop an income from various sources to help you build your wealth. Investing is considered to be one of the second sources.

  1. Avoid unnecessary expenses 

“Beware of little expenses; a small leak will sink a great ship.” — Benjamin Franklin.

Living within your means is a great virtue for financial growth.

It is common to increase spending with an increase in income to upgrade our lifestyle. However, a balance has to be created in using that money today and harvesting it for tomorrow.

It does not mean that you have to avoid necessary expenses but rationalise it. your expenses are lower than your income by a comfortable margin- say at least 30-40%. This will help you build wealth for yourself.

  1. Have an emergency fund

You can have an emergency at any point in your life, such as a medical emergency in your house, a sudden house/car repair, loss of job, etc. So, at that point, you should have enough money to meet your day-to-day expenses for upto six months to a year without splurging

If you have a working EMI or impending large outlays, ensure your emergency fund accounts for these as well.

  1. Invest your money 

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” – Robert G. Allen.

Just saving is not going to make you rich, and finding investment instruments that beat inflation is essential. There are various instruments available in the market, such as equity, fixed income instruments, mutual funds, real estate, gold, etc., where you can invest. However, one should consider his goals, risk profile, age, income, etc., while creating a mix of assets. 

Suppose, if you are 60 years old and retired, then you might not consider investing your money into equities as they carry high risk and have the possibility of even going to zero. On the other hand, if you are 27 years old and single, earning sufficient money, and are saving for retirement, then equity will be a good option for you as you will give your money more time to grow. 

It is generally believed that allocation towards equity should be determined through this formula – 100 – age. So, if your age is 30, you can invest 70% in equity.

Based on risk, if you have a relatively high-risk tolerance and the time, then equity could be a better option for you. However, if you have a low-risk tolerance but want higher returns, then a bond might be more appropriate, where your capital will be protected. 

One of the essential rules of investing money is to be patient.

The market will someday go up or down, but you have to stay invested.

For any investment to grow, it is important to stay invested for a long time.

  1. Take calculated risks

Different assets provide different returns. The returns you generate will depend upon the risk you have taken. Expecting fixed deposits to give a higher average return than stocks, is impossible. This is because you are comparatively taking less risk in FDs than stocks.

To earn high returns and generate wealth, you need to invest in risky assets. But before investing, you should consider factors even time of exit and tax factors and then invest.

  1. Diversify your investments

Diversification is an investing strategy used to manage risk. It says that rather than investing money in a single company, industry, sector, or asset class, investors should diversify their investments across a range of different companies, industries, and asset classes. This is because the risk will be spread out across different assets. If one asset class does not perform well, the other might and vice versa, which means the overall risk can be reduced.


In India, as of August 2021, there are 1.2 crores active investors against a country of 138 crore people. We have a long way to go. 

To generate wealth, investing is very important. Investing will fulfill your financial goals and provide financial security and freedom after your retirement.  

However, one should consider the risks involved in investing, consider the right investment vehicle, stay invested for longer and start investing as early as possible.

As said by Benjamin Graham, “Successful investing is about managing risk, and not avoiding it.” 

To understand more about allocation of your money to meet financial goals, reach out to us at:contact@sbsfin.com


Are you Holding Adequate Emergency Funds Amidst Covid-19?

Most people think they have nothing to worry about until something unexpected happens. This suddenness can catch you off-guard without any financial preparation. Something as simple as being late on a bill or as extreme as being robbed and watching something they’ve worked hard for disappear in minutes.

The recent experience with Covid-19, made everyone realise the emotional and even financial preparation they had, or the lack of it. The last two years saw job loss, salary cuts, deaths, and many unimaginable emergencies.

During the second wave of Covid infections in India, around 20-23% of affected people had to visit the hospital for treatment. During the third wave, however, only 5-10% of people so far have needed hospital care. But as we have experienced, situations can turn any moment.

The hospitalisation costs have been high during the second wave, and shortage even led to black marketing of essential medicines. If we are not financially prepared for times like these, we could be losing all our savings in one go.

Whether its Covid-19 or any other unforeseen circumstances, the need for adequate emergency funds has never been more apparent.

What is an Emergency Fund?

An emergency fund is a fund where you save money regularly, to help you meet obligatory expenses without taking a last-minute loan or selling your assets. Obligatory expenses are those which are essential for your day-to-day life and cannot be avoided, such as food, rent, EMI, basic repairs and maintenance, insurance premiums, etc. 

However, obligatory expenses could mean keeping a domestic staff, chauffeurs, or going to a gym for some individuals. It will vary depending on income and lifestyle.

An emergency fund will help you carry on your life, as usual, become financially secure, and it will also provide a safety net in case of an emergency. 

How to Save for an Emergency Fund?

Start with a beautiful quote on savings by Warren Buffett. 

“Do not save what is left after spending, but spend what is left after saving.”  

For saving, the most important thing to do is budgeting.

  • As a first step, figure out what your spending is. This involves keeping track of all your obligatory and discretionary expenses. 
  • Post this, make a budget that will show how your expenses measure up to your income. Now, plan your spending, try to cut unnecessary and impulse expenditures and set up short-term and long-term goals.
  • Next, estimate the money required in your emergency fund. The amount could differ for every individual.
  • Once you know your requirement, start saving each month to build a corpus.

How much should be your Emergency Fund?

Each individual can have different amounts in the emergency fund depending on factors such as age, the number of dependents, income, health, lifestyle, etc.

If you are the only earning member with dependents and kids, you might want to save more to cover expenses for all, and if you are single and have no dependents, you could save less counting only your expenses.

However, it is believed that to be financially secure, an individual should have three to six months of living expenses saved.

For example, if your monthly expenses are Rs. 40,000, then you should have anywhere between Rs. 1, 20,000 to Rs. 2, 40,000 at any time.

Investment Avenues for Emergency Fund

Find a lucrative and safe instrument to invest the money once you know how much to keep in an emergency fund.

An emergency fund has only one objective, to provide you funds when you need them, without any delay.

Ideally you can invest your money in a liquid instrument that has no lock-in period.

Individuals should avoid having an inadequate emergency fund that will be unable to meet their expenses. 

The options available to an investor are:

  1. Cash

Cash is the most liquid instrument in case of emergencies. There might be times when you are unable to visit a bank to withdraw money or when online payment is not accepted. However, cash should be kept only minimal.

  1. Savings account

Keeping money in a savings account is just like maintaining cash, but with some interest component. A savings account is a very safe instrument and will also provide you with some returns. In a savings account, you can also withdraw money at any time without any withdrawal fees.

  1. Short-term fixed deposits

You could also think of investing in a short-term fixed deposit. It is also a very safe instrument that will provide you with better returns as compared to a savings account. However, check the terms and conditions withdrawal fee before opening a deposit account. You can take out an emergency loan against your fixed deposits.

  1. Overnight funds

Debt funds that invest in overnight securities are known as overnight funds. 

Overnight funds have zero interest rate risk and minimum credit risk, thus they are among the safest debt funds. They also provide better returns than fixed deposits and are more liquid. 

  1. Liquid mutual funds

Liquid mutual funds are also an excellent investment option to park your emergency funds, and they invest in short-term money market instruments having a maturity of up to 90 days. The short-term money market instruments include Certificates of Deposits, Term Bills, etc. They offer a higher return than fixed deposits and are more liquid. 

However, they carry an exit load if redeemed before seven days. If liquid mutual funds are redeemed before three years, then they are also subject to capital gains tax. 

Avoid investing in just one instrument but split up your emergency funds among the above instruments based on your risk level. 

You should also avoid investing your emergency funds in highly volatile assets, such as equities, equity mutual funds, corporate bonds, etc., or instruments with more extended lock-in periods, such as Public Provident Fund (PPF) and National Savings Certificate (NSC), etc.


“Someone’s sitting in the shade today because someone planted a tree a long time ago.” — Warren Buffett.

If you want to have funds during an emergency, start saving money for your emergency fund today. 

It is critical for investors to have an emergency fund to meet the unexpected liquidity needs that may arise in their life’s journey and cannot be postponed.

For many of us, Covid-19 has been a warning. 

As per a recent survey, 51% of people have started to save more than before, and 36% of people are investing more in wealth creation.

You can think of an emergency fund as your parachute that will save you from falling. 

Building an emergency fund is not enough. You need to review it at least once a year, as there could be changes in your financial goals and needs.

Reach out to at:contact@sbsfin.com for more investment avenues for liquidity.


Great Investing is a Marathon, not a Sprint

Since I am into running these days and training for my first 11k, marathon strike me as an accurate metaphor for investing. Successful long-term investors are like marathoners. They must be well prepared, resilient, disciplined and focused to complete the run. Sprinting, like short-term investing, is really a different sport 🙂

You ask any runner; no runner thinks about 42 kilometers at once. Even the thought would be overwhelming. Instead, runners picture their run-in blocks: 5km, 10km, or even one kilometer at a time. Manageable blocks.

This same philosophy can be useful when saving and investing, let’s say, for retirement, especially when it’s still decades away. While the idea of saving a big corpus to retire comfortably may feel like a near-
impossible feat when we assign a number, investing just Rs.1000 per month in your 20’s looks manageable and reasonable.

In a world of instant gratification, we look for quick returns on even our investments, whether it is in stocks, real estate, or any other financial product. But to be truly successful, look at investing for the long term.

We can learn a lot from marathon runners when it comes to investing.

1. Preparation and planning. When you are training for a marathon, runners have a plan broken down into daily tasks. They not only run but also prepare their body by investing in strength training to build
stamina and endurance. Same way, investors need to have a roadmap, learn, and educate themselves on investments, opportunities and risks involved.

2. Patience is a key. You don’t run 42 kilometers straight away; you prepare your body, and it takes immense patience to run a marathon. Same goes with investments. We rarely get instant gratification. Wealth creation journey is a journey of patience. The trick is to be patient and stay the course.

3. Perseverance. A runner must be mentally and physically prepared for marathon long before the start of the run. Investing is no different. In the investing journey, you will encounter setbacks, losses, and market volatility. Investors' tenacity and staying power will determine victory.

4. Focus. Marathon runner’s focal point is reaching and crossing the finish line. Their goal is to run 42 kilometers. Same way, investors have goals, but the goals keep evolving with time. Investors need to focus on their vision, road map to stay on course and reach the destination.

There’s no denying the power of consistency and daily showing up to become a successful marathon runner. Same way regular savings, time and compounding will take you towards your goal. A journey of a marathon begins with the first step. A journey to Rs.1 crore begins with your first Rs.1000 investment.