Small is Beautiful

 

'Small is Beautiful' applies in investing too

There was once a tree at the edge of a forest that had deep roots, a thick trunk and wide branches. A lot of birds sat on its branches and passers-by sat under the cool shade that the tree provided to beat the scorching sun. At the foot of the tree there was a small plant that seemed slender and delicate and swayed at the slightest breeze.

The big tree was very proud of its achievements and often mocked the smaller plant. It even advised the small plant to follow in its footsteps and spread its roots wider. To this, the smaller plant smiled and remarked that it was safe just the way it was. The big tree had a hearty laugh at this thinking that the small plant had lost its mind.

But the big tree had spoken too soon. A few days later, a big hurricane struck the forest. The hurricane was so strong that it uprooted the thickest of trees, including the big tree at the edge of the forest. However, the small plant had managed to twist and turn with the strong gushing winds and survive the storm!

The story of the big tree carries a lesson for equity investors. There are many who feel that one needs to invest large sums in equities to create wealth over the long term. But this may not be true. Even smaller sums invested regularly over a stretch of time can help to compound and yield a large corpus.

Similar to the small plant which braved the hurricane, you too can create wealth despite bouts of volatility by choosing the SIP route. The only condition is that you need to be persistent and withstand the negative periods of the market. We therefore say that SIP is like a good EMI – an investment and not an instalment. Just as we are committed to pay our EMI, we should continue our SIPs for longer periods of 10, 20, 30 years and create wealth in the process. So if you believe that small is beautiful, then SIP is the way forward to meet your long term investment goals.

Next Portfolio 

www nextportfolioindia.com

How Is Investment Significant For Millennials ?

Why is investment significant for millennials ?

If you are born between 1981 and 1996, you are a millennial. Millennials are highly ambitious and passionate about money and growth. At the same time, having bad spending habits and 'living in the moment' may not be good for your financial health.

Dreaming big is an inherent part of life, but it requires strategy and time for completion. Millennials have enough time to get things on the path and understand such an approach.

If you are a millennial and haven't yet invested, in this article, we will give you some points on why it is essential to start investing as a millennial.

Changing the life of Millennials

Businesses are taking advantage of new advertising techniques like memes and short videos because they see how social media trends have changed in the last few years. These marketing trends are affecting millennials to buy products that are depreciating in nature.

Social media is not the only reason to start investing. There are many other obvious reasons why it is essential to start now.

Importance of building a Habit of Investing

1) Expensive Lifestyle

A few years back, it was an unnecessary luxury for the middle class to own a car or a house in the city of choice. Fast forward to the present, a car and a place in the town of choice is a need for most people belonging to the millennial generation. It is expensive to live a comfortable, safe, and secure life in today's world.

That's where investment plays a role to help in living a life of choice without stressing about inflation and expenses.

2) Lack of income source security

By analysing today's economy, job security is a question mark for many organisations. It is necessary to secure your near future along with long-term financial objectives. You need to make strategic investments for a retirement plan, build an emergency fund, and have health insurance.

3) Achieve ambitious long-term objectives

Millennials are ambitious towards achieving their long-term objectives. Achieving such ambitious goals requires investing regularly in investment options that can generate high returns.

Starting with easy and hassle-free investment schemes with reasonable returns such as equity mutual funds. Manually increasing the SIP amount to reach goals faster can be better.

Before jumping to investment, analyse your risk tolerance and know your investment horizon. Also, you can start in an index fund that tracks the broader market and gives returns in line with the market.

 It is always advisable to take the help of financial advisors.

4) Keep a health check

One can easily see the relationship between bad eating habits and their effects on finances and health. Junk food has become an inseparable part of our lives. Also, it is eating our hard money savings and potential investments too.

During covid, we all realised the importance of health insurance, especially for those who had lost their only family member. After analysing your body type, eating habits, and family health history, getting health insurance is essential to keep your finances healthy. Insurance companies also offer consumers financial benefits and discounts on regular health care.

We can get prepared for what we cannot avoid, genetic disease or disease due to unavoidable pollution. Health insurance has a waiting period for various claims under different situations. Millennials must buy a health insurance policy before hospital bills eat their finances.

How to start investing ?

By following a standard series of steps, a millennial can start their investing journey in any category of investment schemes.

1) Plan: Plan your finances by starting from analysing your current situation, and framing where you want to be must be the first step of investing.

2) Financial goal: Financial goals can be either long-term, medium-term, or short-term. You can decide where you need to invest according to your time horizon.

3) Expected rate of returns: Your financial goals will decide the required rate of returns and how much time you have to achieve such objectives.

Conclusion:

The habit of investing takes care of funds, emergencies, and loved ones. In this real world, where everything is growing with unmatchable speed, investment is the only way to grow money.

Habits, dreams, and macro-economic changes are the significant reasons millennials need to start investing.

Millennials still have the luxury of time to use the power of compounding. Starting with a small investment can be significant in no time. So let's get started with the first investment.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Next Portfolio

www.nextportfolioindia.com

Mr. Volatility

 

Mr. Volatility

One day Mr Volatility walked up to the swimming pool. There were many swimmers having a good time. They were singing, joking, simply playing. They were relaxed and in no hurry.
Mr Volatility walked up to one of the swimmers and mentioned, 'how's your crocodile'.

That set the cat among the pigeons and the swimmers started to rush out of the swimming pool. They seemed to be running for their lives. They all believed that a crocodile was in the pool.

In no time the pool got empty. Everybody was now a mile away from the pool. Alas there was no crocodile.

When Mr Volatility was asked as to why he caused such a panic, he nonchalantly replied, "I was just checking with the swimmer about his 'Crocodile 'brand of swim suit".

This is exactly we have an upheaval in the stock market when volatility pays a visit because of rumour mongering.
To be a successful investor simply stick to your investment path irrespective of rumours and NEWS flows.

If the fundamentals of the economy are strong then there cannot be a better tool than SIP that not only works in a rising market but also in a volatile and a falling market.

There will always be Mr. Volatility lurking in some corner. Just ignore him and stick to your investment path. That will make you, Mr Stability.

Happy Investing

Next Portfolio

www.nextportfolioindia.com

Opportunity

   "You make triple-digit gains not when things go from bad to good, but when things go from bad to less bad."...

Says Mr. Steve Sjuggerud.

Think long-term. If the long-term outlook is good, then temporary crises are just great buying opportunity to accumulate quality stocks at reasonable valuations. Markets will keep going up or down; you have absolutely no control over it. 

Periodic volatility is healthy and good for the market; it keeps the herd mentality in control. Make volatility your friend and take advantage of it instead of getting scared. It is always difficult to time the market and when stability returns, there is a chance that prices will once again bounce back without offering an opportunity to buy at the right time.

Next Portfolio 

www.nextportfolioindia.com

Be Patient

 "Be patient; wait until everything is in your favor to interest"

Equity investing is a wealth creating mechanism. Buying equity is participating in the growth of the company. As companies grow, so will your money. There will be ups and down, there might be the volatility as obstacles for the growth but if you are investing, you are still buying a small part of a business. Equities are one asset class where you can beat inflation and by a large margin if you make the right decisions.

There are two emotions in the market: Greed and Fear. People come only out of greed. Greed is highest when market is at the peak of the bull phase. That is the time when 80-90 per cent of the investors enter the market, when actually no one should come close to it. They sell when fear is the dominating emotion, that's when the market is at the bottom. So they buy at the top and sell at the bottom. It will keep happening. You have to master these emotions. Buy when everyone is selling and sell when everyone is buying. If you do that, you will not lose money.

Stop checking your stock prices daily. Turn off TV shows. Don't follow the crowd. Invest in fundamentally strong companies and be patient, don't trade. Avoid direct investing; if you do not understand the company or have no time or resources to track the market then the mutual fund investments is the best route and leave it to professionals. 

Speak with your Financial Distributor today, 

Invest regularly.

NEXT PORTFOLIO

www.nextportfolioindia.com

Having A Security Guard For Your Wealth

Having a security guard does not mean that your home should be burgled every night and that he should be fighting off the burglars every night. 

A guard provides us peace of mind.

You are happy to have him standing in front of  your house day in and day out despite of theft. 

Even if several years pass and there isn't any attempt of theft, we never regret having the security guard outside our house. In fact we will be happy to have him there for years together without any experience of theft.

Likewise, having a Financial Distributor does not mean you need to engage him on a daily basis. 

He too is like the security guard. The only difference being the security guard looks after your home while the Financial Distributor looks after your wealth.

His being there gives us peace of mind because we know that while we may be busy with other work, he is looking after our wealth.

He guards us against incorrect investor behaviour that we can show up from time to time

He guards us against making untimely redemptions

He ensures that we invest regularly and stay invested for the long term.

Just being there on our behalf guarding your wealth is a job by itself and needs to be done well.

Next Portfolio

www.nextportfolioindia.com

Time , Patience and Loyalty

 

Time, patience and loyalty are key ingredients in the journey of life.

People who seek pleasure in flirting get afflicted by AIDS or some other strange ailment.

Even in investing, flirting remains a risky proposition.

The human mind sometimes thinks it can beat age old values of patience and loyalty.

It seeks for a new and more profitable path. A path driven by overconfidence and greed.

But time and again, such thinking falls flat on its face and instead of making great returns, one lands up with below average returns.

It is a common occurrence that mutual funds deliver good returns but investors don't.

This is because investors are not loyal to any mutual fund and instead flirt with different funds all along their investing life.

All they succeed in is, staying married during bad times and are missing out the good times.

Just as in life, Patience and Loyalty give the best returns in the journey of investing as well.

Next Portfolio

www.nextportfolioindia.com