Shant Investment Plan

 

Shant Investment Plan

An old farmer and his grandson lived on a farm. One day the grandson said, "I try to read the Bhagavad-Gita just like you but I don't understand it much. And whatever little I understand, I forget it very soon. What is the use of reading this book?"

The old farmer quietly turned from putting coal in the stove and said, "Take this coal basket down to the river and bring me back a basket of water."

The young boy did as he was told, but all the water leaked out before he got back home. The farmer asked him to try again, and again. But every single time, the water leaked out of the basket before he got back to the house. Finally, he said exhausted, "See Grandpa, it's useless!"

"So you think it's useless?" the old farmer said, "Look at the basket." The boy looked at the basket and for the first time realized that the basket had been transformed from a dirty old coal basket to a new clean one, inside and out.

Investment Lesson

Similarly investors who start their SIP don't realise its virtues (benefits) initially.

But nurture it with patience and discipline and over a period, the benefits of SIP will emerge just like the sun emerges at dawn brings light and prosperity to our lives.

SIP always rewards people with discipline and patience by providing delayed gratification.

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Keep It Simple

Wealth gets created by keeping things simple.

1) Invest regularly : like regular morning exercises builds health, regular investing builds wealth.

2) Make it a marathon : 'Being regular' is vital but what is even more crucial is being regular for very long (for 10, 15 or 20 years)

3) Knowing Less is More : What is important to remember is invariably wealth creation is inversely proportional to common market knowledge.

Just like incomplete knowledge of medicines can be damaging to health, similarly little knowledge of markets does more harm than good.

In fact it would not be inappropriate to say that one can create wealth by knowing less. The more you think you know, the higher the probability of going wrong.

This is because 'nobody' really has seen the 'unseen' and even if you guess it right once it is not sustainable. This path is fraught with failure.

Little knowledge means our wealth is at the mercy of speculative thinking.

With little knowledge we may win some battles that would subsequently get balanced by excruciating defeats.

Instead staying invested oblivious of the surrounding noise is a better strategy for wealth creation.

Start early, start small, stay invested for long, be lazy, be ignorant, stay stubbornly invested.

This is the path that leads to wealth creation. 

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Investment requires discipline

 "If you don't see yourself as a winner, then you cannot perform as a winner"

"Having a dream is what keeps you alive. Overcoming the challenges make life worth living"

A mountain...it represents both a high point and a low point. And even climbing a mountain, there will be moments where you are going up, and then need to change direction and go down in order to continue to the peak. Don't get stuck in the place. Change your mindset. Keep moving. Take decisive action eventually to reach the peak.

Same is with equities, stock markets have cycles both up and down and neither the brokers nor the investors can predict them. The stock market and Government lawmakers will continue to be unpredictable. Don't panic in adverse market conditions. Understand volatility for better returns; this trade-off is a good one for long term investors. Ride out the volatility. Volatility seems to have become the norm for the markets now. Great investment opportunities arise when excellent companies are surrounded by unusual circumstances that cause their stock to be undervalued.

Understand equity markets; follow the growth of the economy. If the economy is doing well or has the potential to do well with many favorable factors, then the equity market will go up in the long run despite volatility. Investment requires you to take the emotion and guess work out of your actions. It requires discipline. 

Speak to your Financial Distributor today. 

Invest wisely.

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SIP OR LUMPSUM - WHAT SHOULD YOU CHOOSE

 

Investors are often faced with the dilemma of selecting between SIP and lump sum investments. Most importantly, they want to choose an option which gives higher returns. First, one needs to understand how SIPs (Systematic Investment Plan) works.

It is essentially a mechanism wherein you invest in equity or mutual funds either monthly or quarterly. Numerous fund houses provide the option of daily SIPs too. You have to select the amount you wish to invest at regular intervals. Keep in mind that this amount remains the same irrespective of market fluctuations. Let's say, you decide to invest Rs.4500 in an SIP on a monthly basis; this implies that each month on a specified date you will invest Rs.4500. Over the years, the SIP will add up and give substantial results.

Lump sum as the word implies indicates that a huge chunk of money is invested into the market at one go. This kind of investment behaviour can fetch great returns at times but it can also be destructive when the markets are volatile. In such situations when it is tough to time the market, SIPs are a safe alternative. As a small amount of money is invested over an extended period, the risk is spread evenly as opposed to lump sum funds wherein the whole amount is at risk.

In addition, SIPs help to cultivate a regular habit of saving. You will not be able to spend on things you don't need since the specified amount will be automatically invested.

To conclude, it is vital to have a detailed understanding about your cash flow and monetary aims before deciding to go for SIP or lump sum investment. If you earn regular income every month, it is favourable to choose an SIP. Nonetheless, if your earnings are irregular and once in a while you earn more money, capitalizing those funds in a lump sum investment might be a good idea.

Make sure that you place aside a part of your income each time you get sizeable amount of funds. Considering the immense advantages of SIP, you can also invest a small amount in SIP out of your income so that you can pay for it monthly even if it's Rs.500. If you can balance between SIP and lump sum investing effectively, you can build a healthy portfolio and achieve your monetary goals without any difficulty.

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Patience and Discipline

 

Whenever we have a hearty meal, it seems so enjoyable but afterwards the feeling is 'full' and sometimes very unpleasant. One feels very lazy and lethargic. On the other hand if one does an intense workout that leaves you sweating like a pig, the 'feeling' that follows is almost always so pleasant. One feels energetic and lively.

Similarly when one invests with discipline and patience, it may not seem pleasant in the beginning but as you invest with discipline and patience over a period of time you start to feel energetic and confident as you experience the formation of wealth. But if you were to spend your money on goodies and things of pleasure, the immediate feeling may be nice but later on, one feels the misty and pain of poverty.

Clearly making wealth demands discipline and patience. It does not come easy.

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7 Steps to Secure Financial Future

 

Every responsible person thinks about a secured financial future for his or her family. However, acting to secure the financial future one has to plan in advance. Here are some steps that could help you towards financial freedom in the future.

1. Manage expenses: Financial Distributors say expenses are the backbone of an individual's financial planning. To spend judiciously, learn the difference between needs and wants. Once you know the difference, it becomes easy to control unnecessary expenses. Remember, as you manage your expenses, your savings would increase which could be invested smartly for wealth creation in the long run.

 

2. Identify financial goals: Zero in on financial goals and set deadlines for each of the goals. The next steps are to measure those goals and regularly check your progress. Be flexible for course correction in case of any divergence from the planned course. 

3. Buy risk covers: Have adequate insurance to protect those who are dependent on you financially. Buy a life insurance plan. Also have health cover for the whole family and insure your house. 

4. Take calculated risks, not blind ones: You should not be afraid to take risks but should not invest based on tips. Aversion to risks could also be due to lack of understanding of investment products. So try to understand the basics of investing and finance. 

5. Don't fear numbers: Often women are found to be fearful of numbers, which eventually leads them to depend on others for their financial decisions. Women should not fear numbers but should be in-charge of the situation and take decisions about what they really want financially. Number crunching could be delegated to someone else. 

6. Ensure inflation-plus returns: Always ensure that your investments give you returns which can beat the inflation rate. Else you would end up with a negative real rate and in the long run you will not create wealth. 

7. Get a good Financial Distributor: Choose a Financial Distributor after proper due diligence because if you get a good person to handhold you with your financial plan, the advisor, like a friend, will remain with you for life.

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Why do people commit FINANCIAL suicide ?

 

Why do people commit FINANCIAL suicide ?

Would you ever drive a car if you do not know driving?

Obviously not because you could kill yourself.However, if you were told that the outcome of the accident would be felt after 40 years.

What would you do then?

Perhaps most of us would take to driving despite lack of knowledge.After all 40 years is a long time. Who cares what happens then.

Human nature is such that we are only concerned about our immediate future.

Unfortunately, this is the principle commonly applied by people in 'personal investing'.

Therefore it is not surprising that we continue investing in Fixed Deposits. After all the consequences of such financial misadventures has no immediate impact.

Most people investing in Fixed Deposits are earning either 'business' income or a 'salary' income that takes care of their immediate needs.

Who really cares what happens in the distant future?

People conveniently reason it out that they will cross the bridge when the time comes. But this 'thinking' is extremely dangerous to say the least.

When people do not make the right decisions about investing during the good days of their lives when they are young and energetic, they will find no bridge to cross during their 'not so good' days when old age strikes them.

As far as investing is concerned, 'delays' certainly prove to be costly.

Also, we need to realise what appears to be a distant future isn't so distant after all for 'time' flies and how.

Therefore, it is actually dangerous to make 'personal finance' decisions without consulting an expert in Personal Finance.

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