Mutual Funds: Towards a better future

TOWARDS A BETTER FUTURE

 Why You Need to Save:

Inflation:       

  • A Rupee today is worth less tomorrow. You need to save to counter the rising prices …
  • If money is not growing at a rate higher than inflation, then in reality you are decreasing your wealth

Uncertainty:

  • Uncertainty about the future earnings
  • Preparing for any unfortunate eventuality / liability

Creating Wealth:     Money Attracts Money … this is very true if you follow the Basic Investment Principles to create wealth

Achieving Dreams / Goals:  One can easily achieve all the dreams in life like peaceful Retirement, Child Marriage, Education, etc if we plan & save systematically

 

What Every Person Needs to Know

You don’t need to be Wealthy to Save.

But You need to Save to be Wealthy 

 

 Musts for Every Individual

Save for Retirement:        

  • Break-up of joint family system, financial independence, rising health care costs with higher risks of diseases, rising life expectancy, etc …You need to at least save for 20 years of retired life with dignity
  • At age 35, if you are spending Rs.25,000 per month, at retirement age of 60 you would need Rs.1,29,000/- per month !! And Rs.5.90 Crores for 30 yrs of retired life … !!!

 Save for the Important Goals in Life:   

  • Plan for Children: Costs of Education and Marriage is rising at a fast pace.
  • Cost of higher education has risen from around Rs.50,000 in 2001 to about Rs.2,50,000 today (for MBA studies)
  • Property prices have almost doubled in the past 2-3 years …
  • Not preparing for such goals / responsibilities today, can leave you high & dry tomorrow …

 

Basic Principles for Wealth Creation

 Following these basic principles can help you greatly in meeting all of the goals / responsibilities in life …

Principle 1:               Starting Early

  • By Starting early, you benefit from the ‘Power of Compounding’ – called as the 8th wonder of the world by Einstein himself
  • Starting saving early would reduce the amount needed to save and would greatly increase your end wealth …
  • Every week / month you delay your wealth, you are potentially loosing a great deal of money

Principle 2:               Saving Regularly

  • Continued saving, even though less, has greater impact on your end wealth than you imagine
  • Disciplined approach to investing is the ideal way to invest and lumpsum investments have to be treated in addition to the disciplined savings …

Principle 3:               Investing in the Right Asset Class

  • Selecting the Right Asset Class has a huge impact on your end wealth … can potentially make the difference between a Lakhpati & a Crorepati …
  • Investing in assets like deposits, bonds, etc are not for wealth creation, but only for wealth preservation. However, even this view is faulty since the effective real (net of inflation) post-tax returns are negative … meaning you are loosing your wealth & becoming poorer!!!
  • It is a well known fact that equities are the most ideal asset class to create long-term wealth

 

Investing in Equities / Mutual Funds

  • Historically equities have out-performed all other asset classes. In past 27 yrs. BSE Sensex has given about 20% returns yearly in spite of all the problems … Rs.1 lacs then is worth Rs.140 lacs today
  • Is not risky in long-term – this can easily seen in past and is a well accepted fact
  • Investing in India & Indian Equities – offers a great potential to get much higher potential returns compared to any other asset class (Strong Indian Growth Story)

Ideal Way to Invest in Equities / Mutual Funds

  •  Most people do not have time, energy, knowledge, expertise to invest direct into stocks
  • Investing in stocks directly has greater risks attached …

The Ideal Way to Invest In Equities is through Mutual Funds

  • Mutual Funds offers several advantages like Professional management, Diversification, Risk Reduction, Choice of products, Convenience, Liquidity, Flexibility and Transparency
  • Mutual Funds offer the ideal way to invest … in any asset class
  • Mutual Funds also offer many Tax Advantages making them the ideal investment vehicles …

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