What all should I do before starting on my investment journey?

Here are 3 key steps you should take before embarking on your investment journey:

1. Emergency Fund: We live in an uncertain world, one in which an emergency can happen any time. Hence, first thing you should do is to keep an emergency fund. Follow a simple 2 steps process to build an emergency fund:

· Ask yourself how much money do i need for 6–12 months expense in case i lose my job/source of income.

· Once you calculate the required corpus, park that amount in a savings bank account. You need not be greedy in chasing a higher return on emergency fund by investing in a high-risk security. Emergency fund should in parked in a very low risk and high liquidity security.

2. Loan: You should get rid of all your bad loans before investing. Bad loans are the ones for which you are paying very high interest rate and getting no other benefit such as tax rebate. Examples of bad loan: Personal loan, Car loan, Bike Loan, Vacation loan.

3. Insurance: Final step before starting your investment journey is to take appropriate insurance to plan for unforeseen circumstances. Insurance doesn’t have to be very complicated. There are hundreds of insurance products available in the market. My suggestion is that you only need 2 types of insurance:

· Term Insurance: For every earning member of your family, you should buy a term insurance. Cover of the term insurance should be ~15–20 times the annual income of the earning member.

· Health Insurance: Health insurance should be for every family member i.e. You, Your partner, Parents, Kids. Given the steep increase in medical care cost every year, you should try to buy a maximum cover that you can afford. My suggestion would be to buy a health insurance cover of minimum 1.5Lakh per family member.