Come into some money?
Just don’t say you’re going to spend it all.
Have the decency to at least save something.
And all of a sudden, our focus turns to the portion you’ve managed to save.
If you don’t fetch out your rule-book now, you’ll probably bungle up with whatever’s left too.
Have some discipline in life, pal.
The first thing you want to do is to set a barrier.
Barrier? Huh? What kind of barrier?
The barrier will cut off immediate and direct access to your saved funds. You’ll get time to think, when hit by the whim and fancy to spend your funds.
For example, a barrier can be constructed by simply putting your funds in a money-market scheme. With that, you’ll have put 18 hours between you and access, because even the best of money market schemes take at least 18 hours to transfer your funds back into your bank account.
Why am I so against spending, you ask?
Well, I’m not.
Here, we are focusing on the portion that you’ve managed to save.
Without savings, there’s nothing. There can be no talk about an investment corpus, if there are no savings. Something cannot grow out of nothing. For your money to grow, a base corpus needs to exist first.
Then, your basic corpus needs a growth strategy.
If you’ve chalked out your strategy already, great, go ahead and implement it.
You might find, that the implemetation opportunities you thought about are not there yet.
Appropriately, your corpus will wait for these opportunities in a safe money market fund. Here, it is totally fine to accept a low return as long as you are liquid when the opportunity comes. There is no point blocking your money in lieu of a slightly higher return, only to be illiquid when your investment opportunity comes along. Thus, you’ve used your barrier to park your funds. Well done!
Primarily, this barrier analogy is for these who don’t have a strategy. These individuals leave themselves open to be swept away into spending all their money. That’s why such individuals need a barrier.
An online 7-day lock-in fixed deposit can be a barrier.
A stingy spouse can be a barrier.
Use your imagination, people, and you’ll come up with a (safe) barrier. All the best! 🙂