I am writing this blog mainly as a note to myself, and also for anyone I may want to share my understanding with. While the fundamentals of personal finance remain the same, this guide is India-specific, and some strategies or steps may not apply to other countries.

I will try to keep things simple and practical, while aiming for clarity and wisdom. This is going to be a long one, regardless.

Disclaimer Link to heading

I am not a finance professional, and this is not financial advice. I have no formal education in finance and I am not qualified to give financial advice. This blog is educational which simply reflects my own understanding of personal finance, and you are responsible for the decisions you make after reading it. I will not be responsible for any losses or damages arising from the use of the information provided on this blog.

IMPORTANT NOTE Link to heading

If you are actively investing but don’t have the bandwidth to learn deeply or take risks with half-baked knowledge, please consult a financial advisor. If you already have a decent income(One lakh per month at least) and net worth(30-50 Lakh At least), professional advice becomes almost essential.

It’s easy to have blind spots, especially around the psychology of investing and choosing investments that actually match your risk profile.

A reliable list of fee-only financial planners in India can be found here:
https://freefincal.com/list-of-fee-only-financial-planners-in-india/
You can also explore and evaluate advisors on your own if you know what to look for.

Avoid investment advice from bank employees, especially relationship managers posing as financial advisors. Their primary incentive is to sell poor products and plans.

Avoid advice from friends and family. Their intentions may be good, but that does not guarantee good outcomes.

If you are not confident in independently finding a financial advisor, stick to the list shared above.

Why do we need to invest? Link to heading

  1. Growth: Ideally, you want your money to grow over time. This means increasing the amount of money you have, for example, from 100 INR this year to 112 INR next year, 120 INR the year after, and so on. Money gives you freedom of choice and freedom of time.

    Freedom of choice means being able to buy what you want when you want. Freedom of time means being able to use money to buy time. Time is precious, and money is comparatively cheap. Having control over your time significantly improves your quality of life. Quality of life should be one of the primary goals in life, but that’s a discussion for another day. You should strive for compounding of your money.

  2. Beat inflation: Inflation means that the prices of commodities (vegetables, electronics, medicines, products, etc.) and services (doctor fees, rent, subscription charges) keep increasing every year, usually. If you don’t invest your money, the quantity of money you have remains the same, but its value keeps decreasing.

    For example, 10 rupees in 2010 could buy a decent amount of vegetables, but today it might only get you a couple of lemons. This means that if you “saved” 10 rupees in 2010 to use in the future, you would not be able to buy the same quantity of goods or services later.

  3. Life Goals: We need to invest to achieve our life goals, such as buying a house, covering marriage expenses, planning for retirement, and funding education for ourselves and our children etc.

Pre-requisites Link to heading

Before you start investing, it’s important to manage risks in your life. Some common risks include large medical expenses, loss of life (if the primary earner passes away, how will the household and family cope?), job loss, urgent or unexpected expenses, and poor financial decisions or behaviours.

The reason we manage these risks first is to allow our investments to grow uninterrupted. If you are forced to withdraw invested money to handle emergencies, it loses its ability to compound. Treat your investments as one-way; avoid selling or withdrawing from them unless absolutely necessary.

Let’s look at how we can mitigate or manage each of the risks mentioned above.

  1. Risk of huge medical expenses

Health insurance is essential. You should buy a policy that offers cashless treatment and does not have sub-limits, room rent caps, or co-pay clauses. Even if you already have corporate health insurance, consider getting a personal policy as well.

For children, consider a minimum cover of 5 lakh, and for adults, at least 10 lakh. Peace of mind is critical. When a loved one is sick, your focus should be entirely on their care, not on financial stress or fighting with insurance companies over denied claims.

A family floater plan with higher coverage usually makes sense. However, exclude parents from the family floater if they are older or have pre-existing conditions, as premiums can become very high. Instead, get separate insurance for them, either through a group policy or individual plans.

Make sure you clearly understand waiting periods, disease exclusions, and claim conditions before buying a policy. Choosing a reliable insurer matters a lot here.

Also, keep a list of good hospitals near you. In an emergency, you don’t want to waste time figuring out where to go. Every second matters.

Reference:
https://www.youtube.com/watch?v=jpAY1f_1A5M

  1. Risk of loss of life

Death is guaranteed. If you are the primary earner, you don’t want to leave your family financially vulnerable. While money is the last thing your family thinks about immediately after your death, once things settle, financial hardships can begin. This is why life insurance is essential.

Your life insurance should ideally cover you until retirement. The assumption is that after retirement, you would have built assets that generate monthly income, or your dependants have become financially independent and you are no longer the primary earner.

It’s important to understand Section 45 of the Insurance Act, 1938, also known as the 3-year rule. It states that no life insurance policy can be called into question or repudiated on any grounds after the completion of three years.

The key is to buy life insurance early. Premiums are lower at a younger age and are locked in for the policy term. Unlike health insurance, life insurance premiums do not increase over time. The insurer you choose matters less, as all companies must comply with the same Act.

Make sure you understand all exclusions related to death, such as illegal activities or high-risk activities. Always buy a pure term insurance plan. Avoid ULIPs or combined investment-plus-insurance products. Choose a regular annual premium payment option.

The mindset that “money is wasted if I don’t use the policy or if I don’t die” is incorrect. This is not an investment. It is risk mitigation.

  1. Job loss / Emergency

You should maintain an emergency fund that can cover your expenses for 6–12 months. This fund is not meant to replace your income, but to ensure that your essential expenses are taken care of during difficult times.

You can park this money in bank Fixed Deposits or Term Deposits (FDs). If you fall under the 30% tax bracket, you may consider keeping half of the emergency fund in FDs and the remaining half in an equity arbitrage fund, assuming that at least 50% of the fund covers a minimum of three months of expenses.

Avoid putting 100% of your emergency fund into mutual funds. Liquidity is extremely important here. Liquidity means the ability to access your money immediately when you need it. Mutual fund redemptions usually take one to two working days to credit the amount to your bank account, which may not be ideal in an emergency.

Bank FDs, on the other hand, can be broken instantly through banking apps, allowing quick access to funds. Some people also prefer keeping a small amount of cash at home for added peace of mind. That choice is personal and depends on your comfort level.

  1. Risk of bad financial actions or behaviours

This one is tough, and I don’t have a perfect answer for it. You can never predict the future or know which asset will perform the best. The best you can do is build a balanced portfolio that includes a mix of different asset classes, and gradually understand a few core personal finance concepts.

Improving your personal finance literacy goes a long way in managing this risk. Talking to a financial advisor also helps reduce blind spots.

Below are some resources from where I learned personal finance.

Books

  • Let’s Talk Money by Monika Halan (very good for beginners)
  • The Psychology of Money by Morgan Housel (slightly advanced; don’t read this without understanding basic finance terms, but don’t skip it)  

YouTube

Check the playlists section on each channel for quick and structured learning.  

Reddit

Facebook

Do not take direct advice from influencers on any platform; use the content only to build understanding. Ethically, I don’t see an issue with what they do, but caution is important.

Remember, you are not going to become a personal finance expert in a month. Follow or join the above channels, keep an eye on new content, and learn from existing material. Spending 10–20 minutes a day over 3–4 years can significantly improve your financial literacy and help you make better money-related life decisions.

Do not skip the pre-requisites. While these steps may not grow your money directly and may feel like allocations without returns, they are critical risk mitigation measures. Prioritise safety and peace of mind before you start investing.

Investment Link to heading

Now that the pre-requisites are in place, you can start investing. Before proceeding, take some time to learn the basics of personal finance using your favorite AI tool (ChatGPT, Gemini, etc.) by asking it the following questions:

  • Explain basic personal finance concepts (assets, liabilities, income, expenses) as if to a high school student. Avoid jargon and use real-life examples.
  • What are asset classes?
  • Explain saving vs investing in simple terms.
  • What are the basic rules of personal finance everyone should follow?
  • What are the historical returns for different asset classes?
  • Explain good debt vs bad debt in simple terms.
  • Which asset classes are preferred for my age (< your age >)?
  • How does a balanced portfolio look for my age (< your age >)?
  • Explain the Indian tax system in detail, including tax implications for each asset class.
  • Explain the power of compounding.

Finally, test your understanding:

  • Quiz me on basic personal finance concepts.
  • Ask for three financial scenarios and consider what you would do in each.

How much should I invest? Link to heading

Textbooks often recommend investing 15% of your monthly income. I would recommend investing as much as possible, there’s no strict upper cap. Keeping your money in cash or a regular savings account means losing value to inflation. Just saving is not enough; your savings need to work through investments.

How do I invest? Link to heading

Most investments should be automated. A simple approach is a Systematic Investment Plan (SIP), where a fixed amount is invested in a particular asset at regular intervals.
For example, investing ₹10,000 per month into an index fund. Automation reduces the risk of missing contributions and ensures disciplined investing over time.

Where do I invest Link to heading

Remember, the best investment you can make is in yourself. This means improving your skills or doing activities that increase your quality of life.

When it comes to financial assets, things are less clear-cut. Personal finance is personal. People invest according to their philosophies. Some examples:

  • I invest in high-risk assets
  • I invest in low-risk assets
  • I invest in government-backed assets
  • I avoid government-backed assets
  • I invest in global assets
  • I invest in private equity
  • I invest in real estate

…and many more. The point is, there is no universal rule or framework. Everyone believes they are making the “right” investment.

The best approach is to understand the pros and cons of each asset class and whether they are suitable to meet your financial goals. It’s also important to maintain a balance across multiple asset classes such as equity, gold/silver, and real estate.

Asset Rebalancing Link to heading

As you age, your portfolio should evolve. High-risk assets like equity should gradually decrease while safer assets like debt increase. Example allocations:

  • Age 25: 80% Equity, 10% Debt, 10% Gold
  • Age 35: 60% Equity, 20% Debt, 20% Gold
  • Age 45: 40% Equity, 40% Debt, 20% Gold
  • Age 65: 10% Equity, 80% Debt, 10% Gold

In practice, you may hold more asset types. The key is maintaining proper allocation. Assets that typically retain value over the long term include stocks, real estate, and precious metals (gold/silver).

Learn more about each asset class from these resources:

My recommendations/opinions Link to heading

Equity:
An index fund is usually sufficient. If you want broader exposure, you may consider FlexiCap funds. Avoid thematic funds and direct stock purchases. You are likely not a finance wizard, and timing the market is often counterproductive. Keep SIPs flowing monthly and prefer “Direct” mutual funds. The amount to invest depends on your risk profile; equity is volatile and somewhat risky.

Debt funds:
For long-term money, consider gilt funds. For short-term money, use liquid and arbitrage funds. Arbitrage funds are tax-efficient and often called the “rich man’s liquid fund.” Do not put your entire emergency fund here; liquidity is key.

Fixed Deposits:
Prefer nationalized/government banks or the top 3–5 private banks. Private banks usually offer better services like customer support and mobile/internet banking. Avoid smaller banks unless DICGC insurance fully covers your deposit.

Real Estate (RE):
Avoid investing in your early years; real estate is highly illiquid and often purchased with loans. Consider RE investments only once you have a lean-FIRE corpus and enough liquidity. Do not tie up too much capital early, as liquidity is crucial.

Crypto (2026 context):
Avoid investing in crypto due to unclear regulations in India. If you choose to invest in the future, limit it to Bitcoin, L1 blockchains, or exchange coins with solid fundamentals. Bonus points if a coin is exchange coin+L1 blockchain. Avoid meme coins.

Government schemes (PPF, NPS, SGB, etc.):

These are okay but avoid them until truly necessary. Government rules can change, and most schemes lock in your money for a long period. They become more suitable for those 40+ when risk appetite is lower and you have enough capital to lock in safely.

Track your money Link to heading

Trust me, many people invest and forget to track their assets, which can lead to lost or unclaimed money(by family), especially after death of investor. To prevent this:

  • Maintain a clear investment sheet.
    • Example: Jagoinvestor Document
    • I believe it’s great and have everything you need out of box. Add any additional details you need.
  • Share this Google sheet with family members.
  • Ensure you have a “Will” if you are retired.
  • (Off-topic)Each family member should also have a shared Google Drive folder with copies of important documents: education, government IDs, insurance, investments, corporate details, etc. Anyone in family should be able to access other’s documents.
  • Always assign a nominee for each investment.

Psychology / Mindset Link to heading

  1. Investments usually deliver around 12–15% CAGR at best. If your goal is to become rich, you need to increase your active income through your job, business, or IP. Investing alone won’t get you there.

  2. High income doesn’t matter if your savings and investment rate is low. There’s little point in earning one lakh per month if you only invest 5k.

  3. If you don’t understand loans, avoid it completely.

  4. Don’t buy or sell frequently based on emotions. Trust your intellect and your long-term plan.

  5. There is no single “best” asset or mutual fund. Every asset class goes through its own cycles of highs and lows.

  6. To benefit from compounding, you need to stay invested even when assets are underperforming. Take this with a pinch of salt: ignore it if you truly know what you’re doing.

  7. Don’t start trading. The odds of consistently beating the market are very low. You may believe that learning technical or fundamental analysis is the key to profits, but the reality is that future prices cannot be predicted. Even the world’s best investors cannot do this consistently. The human mind performs well in predictable environments; markets are not one of them.

  8. Always keep a buffer for mistakes, such as returns not meeting expectations. Plan for disaster scenarios as well, for example, what happens if a banking app fails when you need access to your emergency fund.

  9. Past returns do not guarantee future returns. Just because equity has delivered around 12% historically does not mean it will do so in the future.

FAQs Link to heading

  1. Shall I invest in insurance + investment plans?

No. These plans usually result in terrible insurance and terrible investments. Companies understand the mindset of financially miseducated people and design products accordingly.

  1. Shall I invest in a scheme offered by a bank or LIC?

Most likely, no. These organisations are designed to take your money and maximise their own profits while giving you poor returns, often even lower than FDs. After accounting for inflation, returns can be as low as 2%. Salespeople are usually very persistent and will make you dream of riches. Stay calm and stay away. No sane financial advisor recommends these products.

The only banking products I generally recommend are savings accounts, fixed deposits, loans, debit cards, credit cards (if you know how to use them), UPI and transfer services, and safe deposit lockers. Avoid anything beyond this unless you have done thorough research.

  1. Shall I invest in any product offered by a co-operative bank?

No. Never deal with co-operative banks for investments. Most of them are not covered under DICGC insurance up to ₹5 lakhs. Do not risk your entire capital for a slightly higher interest rate.

  1. Where do I invest my money for different durations?

This is complex, but you can explore the following as rough guidance:

0–1 year: Bank deposits or auto-sweep accounts
1–3 years: Arbitrage funds
3–5 years: Ultra short-term or money market funds
5–10 years: Aggressive hybrid funds
Above 10 years: Active or passive equity funds

This is not a definitive answer, just directional guidance.

  1. My mutual fund is no longer the best-performing one. It was the best 2 (or more) years ago. Should I exit and buy the current best-performing fund?

Usually, no. No active mutual fund remains number one consistently for 5–10 years. Sometimes it will underperform, sometimes it will do well. This applies to asset classes too. Not all assets perform well at the same time. Be patient and stay invested.

Try to avoid active equity funds as much as possible and prefer passive funds. Over the long term, most active funds fail to beat the index (Nifty/Sensex).

  1. I received a large sum of money. How should I invest it?

There is no perfect answer. Every option comes with trade-offs. I recommend reading this:
https://eightytwentyinvestor.com/2019/02/19/you-got-a-large-amount-to-invest-heres-everything-you-need-to-know/

  1. A family member has retired and received retirement money. Where should we invest it?

Talk to a financial advisor. You cannot afford to take risks with retirement money.

  1. Which debt funds give the highest returns?

In debt funds, higher returns always mean higher risk. These risks are usually not worth taking. When investing in debt, play it safe. Risk-taking is better suited for equity. Similarly, don’t look for “safe” equity options. Equity itself is a risky asset.

  1. Can I purchase insurance from Ditto or PolicyBazaar?

They appear to be ethical and are doing a decent job at the moment. However, always review the details they submit to the insurer. Claims can be denied if incorrect information is provided. Also compare prices shown on these platforms with prices on the insurer’s official website.

  1. I am getting tips or courses from Telegram, WhatsApp, or YouTube. Should I act on or purchase them?

No. No one can predict the future. These are almost always scams.

Learn from the rich Link to heading

Rich people typically have high active income, significant equity in businesses, large asset bases, and often own intellectual property. Their income is not limited to a single source, and much of it is scalable.

They understand the purpose of money and how to use it effectively. Money is treated as a tool, not as an end goal.

Once they earn money, they allocate it toward acquiring assets. The income generated from these assets is then used to fund their lifestyle, instead of relying solely on active income.

They think long term and make decisions with a multi-year or multi-decade horizon rather than seeking short-term gratification.

They understand leverage. In a traditional job, one hour of work results in one hour of pay. Leverage changes the equation by allowing the same input of time to produce exponentially larger outputs through systems, capital, or people.

They use money to make more money and rely heavily on compounding over long periods of time.

They pay others to use their time and expertise, enabling them to focus on higher-value activities rather than doing everything themselves.

They embrace failures as part of the process and treat them as feedback rather than setbacks.

They consistently invest in education, skills, and learning to increase their long-term earning and decision-making capacity.

Highly recommend watching this podcast from Naval Ravikant

Abundance of Money Link to heading

Once you become disciplined and have a decent income, additional or surplus money gradually loses its significance. As your income grows, you may start looking beyond traditional financial instruments for ways to deploy your money.

At this stage, it makes sense to invest in other areas of life that improve overall well-being, such as physical health, mental health, and relationships. You may also choose to start a business or pursue a hobby that you genuinely enjoy.

One video that captures this mindset very well is:
https://youtu.be/wnFuPrJjn8Q?si=QTVQSM5Tb5T2c-Ir