A few weeks ago, I received a call from one of my friends who is pursuing medical science. After having a long chat for about 10 minutes, he brought up a very serious situation in his current environment.
He told me that he wants to manage his own personal finance like a professional and to start investing early is always better. We belong to Gen Z and investing is a very taboo topic for us.
So he asked - "Aniket, I want to start investing and manage my personal finance on my own. Are there any good stocks in the current market where I should invest on monthly basics?"
I replied - "There are a few good stocks which I have invested in but, you should learn about your personal finance on your own, and Me advising you regarding your investment would not be your personal finance...You need to analyze your risk and know all the terms and conditions beforehand"
Let me clear the fact for everybody out there thinking programmers are very good at investing their money - it depends on and varies from person to person.
Personal finance is a very necessary skill required for today's modern era and no matter from which background you belong or which generation you belong you should know the basics of investing.
I am clearly not advising you here to directly start investing in the stock market, you can face heavy losses. So, please learn everything beforehand prior to investing in any scenario. There are very good tutorials out there on YouTube or you can audit a free course on courses like Financial Markets just for Knowledge sake.
One beginner-friendly way to start investing in the stock market is to buy fractional shares of stocks. This allows you to own a portion of a share, making it more affordable and less risky than buying a full share. There are several investment apps that offer fractional shares, such as Robinhood, SoFi, and Stash.
My Investing Strategy
So I follow a very basic rule of investing - the 50/30/20 rule.
I am an individual who doesn't have major responsibility on my shoulder. Currently, I am in the very early stage of my career. Hence, my risk factor is quite moderate to a bit high.
That means I can take more amount of risk than a person who has more responsibilities and losses would have more impact on their life. It doesn't mean that I am fine with taking losses, but if there will be any losses from my investing then it won't affect my life that much.
Below is the example of calculations about how I spend my earnings
Assume my earnings are $100 a month
So by 50/30/20 rule
$20 will be my expenses for my month
$30 will be my investing in Stock market and Mutual Funds
$50 will be my savings in fixed deposit on interest of 4-5% p.a
(Please note - it is just for educational purposes and I am not recommending any person out there to follow the same. You can modify it according to your risk-taking capability)
I hope this article will be helpful for programmers out there to start their route in personal finance. Try saving as much as you can by minimizing your expenses. Keep programming keep practicing. Best of luck in your programming journey.