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Saving and Investment Must Be Goal-Linked

Doing repetitive things can get boring. So it seems with investing, too, which could be why investors keep asking for new avenues to invest. If we suggest some mutual fund schemes to investor, he/she says, I have already invested in that fund house, little knowing we may be suggesting some entirely different scheme from that fund house.

Also, there is a perception that investing in mutual funds is for the short-term, However, mutual funds and equities are growth assets that could give good returns, over time. Those who have invested and stayed the course will vouch for it. The Sensex has given an 18 per cent compounded annual growth rate (CAGR) since 1979, which is creditable. That is indicative of the kind of returns this asset class can deliver. The perception continues in spite of knowing these statistics. Fixed deposits, bonds, Public Provident Fund (PPF), and the likes, are investments of choice among people, due to the fact that investors want to put their money where There are many who tell me that property prices cannot go down in Mumbai. I am not so sure, for one. Their outlook is coloured by the relentless rise in property prices in the past six years or so (with a dip in 2008-09 ).But, the steep appreciations which has happened will most probably not happen in future. It is likely to settle in its long-term average of six to nine per cent yearly growth.

Those who buy property for investment, expecting major appreciation, would be disappointed. Property also offers low rental potential of about three to So, the primary reason for buying gold is in the expectation of appreciation in their prices.

Any asset bought with the only expectation of a future price rise and not other payout is speculative. Land investment also falls in this class.

STARTING POINT

Investors need to understand one fundamental fact. Whatever they invest in needs to meet their goals. Goals have to be prioritised. A retirement planning should be high on priority and a foreign holiday may 25 lakh

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