Mutual Fund – Page 6

February 25, 2021

Secure your Child’s Future – Invest in Mutual Fund

Raising one’s child to become the best version of himself/herself is the biggest responsibility of the parents. From nutrition, healthcare to education – you want to provide the best in everything to your child.

Apart from that you also have to make sure that their future is secured.

And the only way to achieve this mammoth task without hurting your own financial future is by investing through mutual funds.

1. Goals for your Child’s Future

The first step towards investing is to know what you are investing for, i.e. what is your investment goal. Now, as parents, you need to have financial goals set for your child.

For example, you have to save for your child’s school admissions, his or her college/higher education, maybe for a degree from a foreign university, his/her marriage, etc. Try to figure out what kind of money you would need to achieve each of the goals.

Say, for your child’s school admission you need to save Rs 2 lakh; or Rs 80 lakh for your child’s higher education, etc. This way you can turn your dreams for your child into financial goals.

2. Choose the right fund and start saving towards the goal

Since you know your goals, you should start saving towards them. Now, it is extremely important to choose the right mutual fund as per your goals.

For example, let’s suppose you would need Rs 2 lakh for your child’s school admission in two years. This is a short term goal, for which the main focus is capital preservation. Ideally, you should invest in Short Duration Debt Funds or FDs to achieve the goal on time.

Meanwhile, you might also want to save for his/her higher education. This is a goal that is at least 17 or 18 years away. And also, due to inflation, the amount that you would need would be much higher than it is today.

For example, an MBA course at a top-rated university costs around Rs 20 lakh today. And at the 10% annual inflation rate the same course would cost Rs 80 lakh in 15 years.

So to achieve this goal, you need to invest in equity mutual funds as they are your best bet to get inflation-beating returns consistently over the long run.

3. Start investing through SIPs to save towards your goal

The easiest way to get into the habit of disciplined investing in mutual funds is by starting a SIP.

Through a SIP, you put a fixed amount of money every month towards your mutual fund investment, which over the years helps you achieve the target amount in time.

For example, say you want your child to attend a top-rated B-school and for that, you need to save Rs 80 lakh in 15 years. If you choose to invest in a mutual fund through a SIP, then your monthly SIP amount would be Rs 16,000 every month to reach the goal on time (assuming 12% average annual returns)

4. Increase your SIP investments periodically

As every year your income and salary increases, you should also increase your SIP investments every year. This can be a fixed 10% every year or as per the percentage of increment in your salary each year.

Now, this timely boost every month can make a huge difference in the final amount that you will receive. Let’s explain this with a two case scenario.

Say you want to save Rs 80 lakh in 15 years to be prepared to send your kid to B-school. In the first case, you keep investing Rs 16,000 per month all through to reach the goal in time.

Meanwhile, if you keep increasing the investment amount by 10% every year, you can save Rs 80 lakh in 12 years. (In both the cases the return amount assumed is 12% p.a., though there are no guaranteed returns.)

And if you reach the goal early, you will be much well prepared when it’s finally time for your kid to go to B-school.

5. Do not stop/skip your SIP investments

To achieve a financial goal on time, this is the most important thing to follow. That is, never stop or skip your SIP investment. Remember, one wrong step can completely jeopardize your child’s future.

The most important future goals of your children are time-bound, like your child’s school, college education, or higher education.

So if you skip, miss, or stop your investments midway meant for such goals, it would mean you might not have enough funds when it’s time to go for college/university. So be regular with your investments.

However, if you had to stop investing for some reason, make sure to fill that gap later by adding money later.

Conclusion:

Ensuring that your child’s future is well secured is one of your biggest responsibilities. There are several milestones that they need to achieve at different ages. And you need to be financially prepared to help them achieve each of the goals.

So set the goals, determine the timeframe, and start investing in the right mutual funds.

January 4, 2021

Markets at all-time highs: Should you exit & re-enter at lower levels?

The markets are high and they look overvalued. Many are worried about the expensive markets. But the bigger questions that investors must ask, are the following.

1. If it falls, then by how much?

2. What if it does not fall much; i.e., what if it is a time-bound correction and not a price-bound one?

3. ‘When’ will it fall?

Now, let’s apply this logic to the stock market. A lot of investors are in a dilemma: ‘should we book profits for now and enter again when the market falls?’

Let’s say you execute this thought and sell all your investments today with the plan of entering the market again when it falls.

And let’s assume your decision is proved right and the market falls drastically in the next few days or weeks.

If that happens, it is not good news. This is because if you are proven right in this decision, you will do it again in the future.

That is, you will ‘time the market’ again and again. And this is a bad habit. If you time the market 10 times in the next few years and you are wrong just 3-4 times out of 10, you may still lose money overall, forget about making great returns.

Check the records of successful investors. Do they follow this practice? If not, why? If they cannot or do not predict the market, what are the chances of you being right?

We have to be careful about the kind of actions we take, as they will become a habit. If this habit is a bad one, it will be very tough to leave it.

Now, let’s see if we can answer the three questions asked earlier.

1. What if there is only a time-bound correction?

Correction can be price-bound, the way we had in 2008 and March 2020. And it can be time-bound as well. That is, the markets remain in a certain range for a very long time.

Examples:

1) From July 2009 till December 2011, again, the Sensex was range-bound.
After moving in a range, the market started moving up again in both cases. If that happens again in the next few months or years, your plan to enter at low values may never fructify.

2) From December 1993 till February 1999 (for more than five years), the Sensex was range-bound between 3000 and 4000 levels.

2. If it falls, then by how much?

Did you invest a huge amount in March 2020? No? Maybe because you were waiting for the markets to fall more. We, as humans, have this deep desire to buy at the lowest level.

And who tells you where the bottom is? TV experts, your advisor, neighbors, colleagues, or friends?

Investing at the lowest point and exiting at the top is a matter of luck, not research. Therefore, the best strategy is to invest at every level. Even at today’s level in January 2021.

In a nutshell, make sure you are conscious of the habits you develop while investing in the stock market. This is what differentiates a successful and not-so-successful investor.

3. ‘When’ will markets fall?

I know investors who sold their portfolios in July 2020. The market had recovered significantly from its March lows and economic activity had hardly started.

Logically speaking, it was the right call. Many investors and experts were expecting the market to fall again.

We are in December 2020 now and we all know what has happened from July onwards. It is not about being ‘logically right,’ but about developing the right habit.

I also know a few of these investors who entered the market again in September-October 2020.

It was not easy for them to watch the markets grow continuously when they had sold their investments in anticipation of a fall.

December 29, 2020

5 Things to know before investing in ELSS Mutual Fund

Your insurance agent may be pushing life insurance as the best option, while your friend extols the benefits of a plain vanilla PPF account or even a tax saving FD with a bank.

And yet, there’s an 80(C) instrument that not just has a relatively short lock-in period of just 3 years – but has delivered a 5-year category average return exceeding 15% per annum and a 10-year annualized return of more than 17% per annum.

These are tax saving mutual funds or ELSS (Equity Linked Savings Schemes. These numbers may seem tempting, but make sure you’ve understood a few things about ELSS funds before you say “Tax Saving Mutual Funds Sahi Hai” and jump in with both feet!

1. They Have no Premature Exit Option

Tax saving mutual funds have a hard lock-in period of 3 years, and there are no options for partial or complete withdrawal. If you’ve invested in more than once tranche over the course of a year, each tranche will be treated as a separate purchase and will have to complete three years before you can access them.

2. They are High Risk in Nature

Being equity-oriented in nature, ELSS funds tend to be quite volatile. In a sense, that’s the price to pay for a significantly higher long-term return compared to low-risk products.

However, if you’re not willing to withstand ups and downs in your fund value, give ELSS funds a pass.

3. Their Returns Are Non-Linear

Many investors who are used to the linear returns associated with traditional products tend to get quite disconcerted by ELSS funds.

Understand that ELSS funds may go through phases of flat or even negative returns, but things tend to average out over the long term as cycles reverse. It’s vital to set your expectations right while investing.

4. The Dividend Option isn’t a Very Smart Idea

You may be tempted to go for the dividend pay-out option in an ELSS, but know that this isn’t a good idea.

First, you’ll take a hit of 15% in terms of dividend distribution tax. Second, dividends from ELSS funds are non-predictable in both timing and quantum, so you can’t really base any plans around them.

5. SIP’s are a Better Idea Than Lump Sums

For the next fiscal year, start a SIP in an ELSS fund instead of investing your money as a lump sum at the end of the fiscal year.

Your unit costs will get averaged out neatly, and it’ll be a lot easier on your pocket too!

December 14, 2020

Does SIP in an ELSS Makes Sense?

With the growing awareness about Mutual Funds more than doubling the industry’s assets in the past three years, more and more people are catching on to the fact that for tax saving, Mutual Funds Sahi Hai! ELSS (Equity Linked Savings Schemes) funds have shot up in popularity in the past year or two. Here are a few reasons why you should consider starting a SIP in an ELSS.

No Year-end rush

So many of us get caught up in the struggle of putting together enough funds to invest in tax saving schemes at the very end of each fiscal year. Not only is this stressful; it also puts you at risk of taking ill-thought-out decisions that you could potentially end up regretting later.

By running a SIP in an ELSS throughout the year, you’ll have completed the lion’s share of your tax-saving investments well in time – so while your friends and colleagues are fretting, you can sit back and relax!

Long Term Compounding

It’s a well-known fact that investments that are linked to the stock markets need the magic element of time to compound and grow.

By continuing your SIP in an ELSS over the long term, you’ll ensure that your money compounds – that is, earns ‘returns on returns’, and therefore outpaces inflation over the long run.

Compare this with tax saving FD’s or PPF accounts, which do not compound your money, and you’ll see the difference that a SIP in an ELSS Mutual Fund can make.

Rupee Cost Averaging

Since ELSS funds are linked to the equity markets, they can potentially be volatile. For this reason, you may find yourself in the unlucky position of having invested in an ELSS just before markets begin to correct, as many investors who deployed lump sums in ELSS Mutual Funds on or before 31st January this year realized.

By running a SIP in an ELSS, you’ll ensure that the average cost of your ELSS units gets averaged out neatly through the ups and downs of the markets.

December 4, 2020

ELSS Mutual Fund – 3 Mistakes to Avoid

3 ELSS Mutual Fund Related Mistakes to Avoid

Of late, ELSS (Equity Linked Savings Schemes) or “Tax Saving Mutual Funds” have gained tremendous popularity. More and more investors are starting to believe that for saving taxes, ELSS Mutual Funds Sahi Hai!

And why not? As a category, Tax Saving Mutual Funds have grown investor wealth at nearly 18% per annum between 2013 and 2020 – nearly twice as fast as traditional choices such as NSC and PPF, and almost three times faster than traditional Life Insurance.

Their shorter lock-in period of three years has added to their allure.

All the obvious advantages of ELSS Funds as an 80(C) instrument notwithstanding, they possess a few all too common pitfalls too. Here are three of them that you must avoid at all costs.

1.Not understanding the risks

Unfortunately, there are no free lunches in the investment world. Increased return potential will invariably be accompanied by an increased risk of capital erosion. Being equity-linked, ELSS funds are high risk in nature – during the crash of 2008 & Covid’19 crisis many ELSS funds fell to nearly half their value!

As an investor, you would do well to understand the risks associated with ELSS funds before taking a final decision.

If you’re very risk-averse, you may want to consider splitting your tax-saving amount between ELSS funds and other lower-risk instruments such as PPF or Tax Saving FD’s – lower returns notwithstanding.

Respecting your unique investment preferences and risk tolerance levels and critical for long-term investing success.

2.The Investing in one shot

A common ELSS Mutual Fund related mistake – is to hold back until the last moment and make a lump sum investment into a tax saving mutual fund and the very end of the fiscal year.

While this approach would benefit you if you luckily end up catching a market bottom; it could work against you if you end up investing at a market peak (neither of which can be predicted).

A much smarter approach would be to start a Mutual Fund SIP (Systematic Investment Plan) in an ELSS Mutual Fund at the start of the financial year, after computing your projected deficit for the year.

For instance – start a monthly SIP of Rs. 12,500 in 12 months will make 1,50,000. In doing so, you’ll be benefiting from a mechanism called “Rupee Cost Averaging” which greatly mitigates the risks associated with the stock markets.

In the long run, your returns will be a whole lot smoother and less volatile, and you’ll worry about your investments much less.

3.The Fixating on the 3-year lock-in

By fixating on the three-year lock-in, many investors harbor the mistaken belief that three years is a sufficient time horizon to invest in ELSS Mutual Funds. In reality, a time horizon of five to seven years is a lot more appropriate, since a Tax Saving Mutual Funds is essentially a 100% equity-oriented investment.

In situations where lump sum investments are made when market valuations are already stretched (such as today’s scenario), it is quite likely that ELSS returns could be flat to negative over a three-year period, with a couple of rough-rides thrown in during the course too.

In such situations, investors need to be willing to extend their time horizons by a further three to four years (beyond the mandated three-year lock-in) to really reap rewards. While you can derive a degree of comfort that the mandated lock-in will finish within 36 months, you need to mentally commit yourself to a longer investment horizon if you’re opting for a Tax Saving Mutual Fund.

December 1, 2020

What to start early: Investment or Insurance?

Several reasons why you should start investing and also get insurance at a young age. But, at the time when we start our career, with a little income and too many expenses, the dilemma that we often face is should we invest or insure first?

Through this blog, I will try to help you get over this dilemma, i.e. whether to invest or insure first.

Before I get it into explaining whether to invest or insure first, it is important to understand why it is important to start investing and also buy insurance (health and life) early in life.

2 reasons why you should start investing early

Starting your investments early improves your spending habits

At the time when we start earning, our income is quite low. And if we want to save from that little amount of salary that we get, then we have to put restrictions on our spending by creating a budget. Over the years this simple practice becomes a habit, eventually improving our spending habits.

To adopt the simple habit of saving/investing, put away the part of the salary at the start of the month. And, then make a monthly budget with the rest of the money you have in hand.

Say you earn Rs 30,000 monthly and out of that you want to save Rs 10,000 every month. So as soon as you get your salary, put Rs 10,000 away, and then create a monthly budget with the rest Rs 20,000.

You enjoy the benefit of compounding
For starting your investments early, you stay invested for longer, which automatically increases the benefit of compounding. Let’s understand this with 2 simple examples.

Say you want to save Rs 5 crore for your retirement. Now, with that goal in mind, you start investing in an equity mutual fund from the age of 22. For this, you will have to keep investing Rs 5,500 for the next 38 years, and your total investments would be Rs 25 lakh.

In the second case, the goal remains the same but you start investing in the goal much later, let’s say at 45. For this, you would need to invest Rs 1 lakh every month for the next 15 years and your total investment amount would be Rs 1.8 crore.

This is how compounding works in favor of money over the years.

After looking at the reasons why one should start investing early, let’s understand why it is equally important to get insurance at a young age.

Here as we speak about insurance, we mean both health and life insurance.
Speaking about health insurance, no matter what your age is you should always have health insurance.

Sickness or some health emergencies can come at any time and if you do not have health insurance, medical expenses can burn a huge hole in your pocket. So you should never delay the process of getting health insurance.

However, we often delay the process of buying a term life reason for very simple but foolish reasons. The common notions are since we are young and healthy or at this stage, as the responsibilities are less, we do not need term life insurance. However, contrary to the popular belief, buying term insurance early on is always favorable.

2 reasons why you should buy term life insurance early

The premium amount is low
The biggest advantage of buying term life insurance early on is the premium amount that you pay is much less as compared to what you would pay if you buy it at a later stage in life.

For example, say you want to buy a policy of Rs 1 crore that would give you coverage till 75 years. If you buy it at 25, the premium amount would be Rs 8,000 annually. At 30, it would be Rs 10,000. And at 45, the premium for the same policy would be Rs 30,000.

Your family gets covered early on
The sooner you buy the term insurance, the sooner your family gets covered. Even if you are not married, your parents might be dependent on you or you might have a loan (vehicle loan, student loan),

In case you die early then your family will have to bear that burden. Having term insurance ensures your family will not have to go through financial hardship in case something happens to you

So finally, whether to invest or insure first?
So, this is typically a chicken and egg situation – who came first.
To put more aptly, here it would be which one to do first, buy insurance, or start investing? Now, the best thing to do is to do both things simultaneously.

For example, let’s suppose Rajeev is a 25-years-old, and given his monthly income of Rs 40,000, he can take out Rs 10,000 each month, i.e. Rs 1.2 lakh annually, for savings/investments/insurance. So what should he do?

Here is how you can allot the money towards insurance and investments

Health insurance: It is a good practice to have at least 6 times your monthly salary as your health insurance coverage. By that logic, since Rajeev’s monthly income is Rs 40,000, his health coverage should be between Rs 2.4 to Rs 2.5 lakh. At the age of 25, the yearly premium amount for Rs 2.5 lakh health insurance would be about Rs 5,000.

Term life insurance: Since Rajeev doesn’t have a lot of liabilities, a term cover of Rs. 1 crore would be enough. Say the term life insurance cover that you need at this stage is Rs 50 lakh. The premium for a Rs 1 crore term policy would be around Rs 8,000 annually.

Investments: The rest of the Rs 1.1 lakh you can invest in Mutual Funds. Since Rajeev is young, he can take risks, and therefore you should invest in equity mutual funds. He can consider large-cap mutual funds or multi-cap funds and start a monthly SIP in these funds.

Now, as and when the income increases, he should also increase your investment amount. Rajeev should also review his health and term cover at regular intervals to ensure the cover is sufficient.

September 29, 2020

7 Things to do when your Mutual Funds are in Red

When investors seek higher returns, they invest in equity mutual funds. A higher return comes with a cost, in equity it is Volatility. Mutual funds are affected when the markets are volatile and this is why your mutual funds are going up & down.

Now many times when the market is volatile, such as now, investors panic and take decisions that may not be in their best interests. If you are an investor and wondering what to do with your investments in this situation, here are 7 things you can do instead.

Keep Calm
This is the absolute first step to successful investing.
The stock markets usually perform well over a long period. In the short term, volatility causes the price to go up and down.

While you can lose money in mutual funds due to short term market disturbances, if you look at the long term, instances of negative returns drastically reduce after 3-5 years of holding.

If you have a longer time horizon of say 7-10 years, you need not get disturbed by the news around and lose your calm. Don’t let the noise get to you.

Avoid Redeeming In Haste
Can you lose money in mutual funds in falling markets? Yes. But does this mean you should redeem your investments? No. Think twice before redeeming your money the moment you see the markets perform poorly.

Certain investors believe they can take their money out of a mutual fund when its value goes up and then invest again when the value starts going down. This sounds good in theory but usually does not turn out well.

What happens most of the time is that people take out their money from a mutual fund and wait for the right time. But more often than not, the timing isn’t perfect. What ends up happening is that people sell when the price falls.

And then, when they plan to invest again, they invest at a price higher than what they sold their mutual funds for. This hurts the long term wealth creation process.

So decisions like redemption should not be a factor of current market conditions. Investing in equity mutual funds via the SIP route is what comes to rescue in such cases since SIP frees you from market timing.

It also leverages rupee cost averaging to buy you more units when the markets are down.

Compare Performance With Other Funds in the Same Category
You may feel the mutual fund you have invested in is not performing very well. This may or may not be a time when the markets are doing well.

A good strategy at this point is to check your mutual fund’s performance with mutual funds in a similar category.

Also, mutual funds are long-term investment options. If you observe your mutual fund’s performance is only slightly poor when compared to the best-rated funds, switching might not be necessary.

Over a short period, various mutual funds perform in different ways. In the long run, the best mutual funds belonging to the same category usually give similar returns.

Compare Performance With Other Funds From Different Categories
Certain mutual fund categories are more volatile. This means, while they might offer great returns, they can also offer higher risk.

If you feel you are not up for the risk, you should look at the performance of mutual funds from other categories.

For example, small-cap mutual funds give very high returns. But they also have a higher risk. Relative to small-cap equity mutual funds, large-cap equity mutual funds have been less risky.

Also, you might want greater returns and be willing to take the risk. In that case, too, you should explore the best funds in the other category for investment.

Research the Sector
Another reason why your mutual funds are falling could be because your investments are sector focused. This point is relevant to you only if you have invested in a sector fund.

Sector funds invest only in a specific sector or industry.
Sector funds are considered the riskiest for a reason – they are even harder to predict when compared to other equity mutual funds.

So if you have invested in a sector fund and are losing money, pay attention to the health of that industry and its prospects.

If you think the industry has a good future, continue to remain invested. If on the other hand, you think the industry isn’t doing well, you should plan to redeem your money.

Diversify
This is perhaps the only way to counter your mutual fund loss at the moment. If your portfolio is exposed only to equity, then add some liquid/debt funds to the mix.

They will not only balance out your losses due to equity but will also allow you to raise money for short term goals. Also, diversify across asset classes.

Gold is considered as an excellent hedge against market volatility as gold prices usually go up when the markets are done. You can look at exposing about 5% of your portfolio to gold.

Can you lose money in mutual funds? The answer is YES. Should you have a knee-jerk reaction at seeing a red portfolio and make big decisions? Probably not. While the situation is uncomfortable, this too shall pass. Markets have bounced back before and this time also.

From temporary events like elections and geo-political tensions to recessions to pandemics, the economy has seen it all and thrived nevertheless. Investing is a long-term game and should be treated like one.

Stay calm, invest with a vision, keep yourself updated and you are good to go!

September 24, 2020

Sensex jumps 13000 – here are 5 mistakes to avoid

Cheering the Government’s move to unlock the economy, the stock markets rallying strongly, taking the Sensex up-to 39000. As an investor, here are five mistakes you should guard your portfolio against.

Don’t succumb to FOMO (Fear Of Missing Out)

You may have exited your equity investments and sat on the sidelines when things started heading down in March.

Now, with the stock markets have rallied 50% from the bottom, you could feel a strong urge to throw caution to the wind and push all your money back into equities all at once. However, this would be a mistake.

It’s highly unlikely that markets will continue its one-directional surge for very long. Once the euphoria settles, real data such as earnings growth and GDP numbers will come into focus and drive stock prices.

Going all in right now could mean that you’ll be staring at a heavy loss when the current rally retraces. Instead, it would be a lot wiser to stagger your way back in using weekly STP’s (Systematic Transfer Plans) over the next 3-4 months.

Beat the Action Bias!

If you were among those who saw their investments sink deep into the red when markets capitulated in March, you may be itching to take some sort of action with your portfolio, now that the notional loss is lower.

There’s absolutely no need to jump the gun and make rash decisions to exit your investments at this time. Remember, you got into equities for the long run – so remain invested through the ups and downs, and let the economic recovery play out properly over the next year or two.

Moving in and out of your investments will surely work to your detriment in the long run.

Don’t stop and start your SIP’s

Remember, we’re not out of the woods as yet. What we are seeing right now is nothing more than a euphoric, liquidity fuelled spurt in stock prices because the lockdown was lifted.

Though the worst may very well be behind us for now, stock-markets wise, a long and winding road towards economic rehabilitation lies ahead. As the world adjusts to the new normal, we’ll see plenty of volatility in the markets.

It’ll certainly be a few quarters before consumption returns to pre-COVID levels. In the interim, we may witness more measures to curtail the spread of the virus, which may hurt market sentiments.

Some businesses will flounder, while others will adapt and grow. In such a volatile scenario, the best thing you can do is to allow your SIP’s to continue dispassionately – a month in, month out.

Stopping and starting your SIP’s would be a big mistake. Just sit tight and let Rupee Cost Averaging work its magic.

Don’t time the market

With the number of variables and incoming data prints involved, it would be impossible to predict the short and medium-term direction of the markets during this time.

You may have one bullish month followed by a severely bearish month, followed by another surge. Towards the end of May, banking stocks rallied 10% in two days for no apparent reason! In times of such extreme volatility, any attempt at trading would most likely land you in a big soup.

Whatever you do, do not try to time the market; instead, follow a disciplined approach to investing, staggering investments into the markets using a well-planned approach wherever necessary.

Don’t invest unadvised

In choppy waters, the support of an astute Advisor can prove invaluable. In such times, even the most seasoned investors can fall prey to a host of behavioral biases that will work to their long-term detriment.

Your Financial Advisor can be the much-needed voice of reason that will help you make better investment decisions. Choosing to invest unadvised to pinch a few pennies would be a highly regrettable decision right now.

Don’t fly solo – instead, hand over the controls to a conflict-free, competent Financial Advisor who is acting in your long-term interest!

September 22, 2020

Five Bad Habits That Are Really Good while Investing

Not on Time – This is one of the most common bad habits. But this bad habit can do wonders to your equity portfolio. One thing that even Warren Buffett doesn’t do is to try to time the stock market. A majority of investors, however, do just the opposite, something that financial planners have always been warning them to avoid, and thus lose their hard-earned money in the process.

So, you should never try to time the market. In fact, nobody has ever done this successfully and consistently over multiple business or stock market cycles. Catching the tops and bottoms is a myth.

No News – Staying updated with the latest NEWS is a very good habit but this could help you lose money in the stock market. Breaking news tends you take wrong financial decisions.

There is a lot of information/news flowing around in newspapers, Social Media, TV, Internet. This information/news is so well decorated for you to take instant action. News tends you to forget fundamentals and emphasis recent events.

Staying away from such breaking news can help you stick to the fundamentals and grow money with the stock market.

Lazy Action – When it comes to investing, people often say that the more active you are, the wealthier you can become. However, it acts in reverse when it comes to investment in the Stock Market!

So, if you are too active with your portfolio, you are likely to get fewer returns! Shockingly, laziness will help you to get more returns! Yes, you read that right! Notably, investors should choose this for long term investment.

And what is more, market variations will not hurt your investment gains. Invest in good Stock/Fund and forget is the best strategy.

Being Unfaithful is really a bad habit but this bad habit can lead you to make more money while investing.

People usually hold a Stock/Fund/Lic because that is very old or is gifted by their Parents or Grand Parents.

Investors lose money and opportunity when are emotionally attached to some stock/financial product that is inherited and doesn’t sell them even it is not making money.

A good return paying Stock/Product/Strategy will not always give a return. Being unfaithful with your investment & exiting will open new opportunities.

Do Your Own – Following your friends/family/acquaintances is a good habit that can often lead to wrong financial decisions.

The typical buyer’s decision is usually heavily influenced by the actions of friends/family/acquaintances.

Thus, if everybody around is investing in a particular stock/fund/asset-class/product the tendency for potential investors is to do the same.

But this strategy is bound to backfire in the long run. Stop following the herd and use your brains to do your own.

Like it or not, bad habits are bad for you — mentally, physically, emotionally, and even financially.

While some bad habits listed above are extremely good for your financial portfolio and you need not get rid of them.

September 22, 2020

7 steps to make Rs 1 crore in the quickest time

How does one become a Crorepati? We have all thought about this one question a lot. Is it really possible to have that number? The answer lies in the equity market, to be more specific in systematic investment plans (SIPs) of equity mutual funds.

7 steps to make Rs 1 crore in the quickest time

Make money, SIP by sip – A SIP is a financial planning tool offered by mutual funds that allow you to invest small amounts at regular intervals over a long period. It also allows one to use the power of compounding to generate big returns in a portfolio.
In the equity market, the general approach of investing is to time the market whereby one tries to buy a stock or an index at a certain level and book profit when it has run up significantly. This approach often leads to common mistakes all investors, who tend to buy high (caused by the exuberance of a bull market) and sell low (due to the hopelessness caused by a bear market).
Start early – Starting your SIP early is the first condition of becoming a crorepati. One needs to start early. This will help the investor use the power of compounding. Especially over a long period, the difference between starting to invest early versus starting late can make a significant difference to your wealth.
What’s the next step? Investors should first chalk out their long-term financial goals to identify how much mutual fund investment one needs to make every month.
Talk to the right guy The next step is to decide on the right fund house and fund. They will be looking after your money every single day till you redeem and, therefore, they are like the coach on who you want to entrust your life’s savings.
Mix it up – SIPs are not just about pouring all the money into the equity market. The mark of a great portfolio is the distribution of risk and diversification across asset classes. One important element in mutual fund investing is the split in asset allocation between equity and debt.
Become the gardener – SIP investing is not about putting in some money and forgetting it, the way Warren Buffett will have you do it. It is more like being a gardener, who looks after his plants almost every day just to ensure weeds are not cropping up. An investor must, therefore, monitor the performance of a SIP.
Taking home the crore – If you have reached this point, you did well. But just investing is not enough, you have to take home all that moolah too. There’s a systematic way to do that, too. Systematic withdrawal plans (SWP) can help you redeem your investment when you hit the retirement buzzer.

Whatever be the case, the investment objective must remain sacrosanct and the investment plan must be made to accomplish the goal within the given time horizon and within a prudent risk framework.

Category: Mutual Fund

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7 steps to make Rs 1 crore in the quickest time

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