Skip to main content

Investing early and for long term to buid bigger corpus

 

Systematic planning and a disciplined life have proven to be the formula for success. How can it be different with your money?



   For many young professionals, it is never an easy task to deal with money. While many find it difficult to generate surplus, those who have the luxury of extra earnings are too worried about its safety. In fact, it is only a small percentage that is willing to take the risk element and experiment to build a corpus.


   Now, why should a young professional turn young investor when he has decades ahead of him to make money?


   The answer is simple. What is begun early always ends up good. Whether it is during student life or professional life, those who plan their days and years well are likely to end up on the winning side. It is not very different with money. To begin with, young professionals who begin taking their incomes and expenses seriously are likely to end up with a bigger corpus than those who take up the task a few years later. Even a saving of Rs 1,000 a month can make an investor worth crores over a period of 30 years.


   In the whole process of investing, the decision to save is probably the easiest thing to do. The choice of investment product is much more challenging as a fresh investor is driven more by the need to protect his savings. Not surprising considering that it would be difficult for the investor to look at the long-term picture. In fact, many fresh investors would hate the thought of thinking long-term when there are so many expenditure options for the earnings in the short term. More often than not, keeping the money intact without diluting its value would be the prime criteria. In a nutshell, most young investors are likely to think the 25-year-old professional.


   While putting aside money in a fixed instrument like a fixed deposit is nothing new or wrong, young professionals can afford to look at aggressive options since they have the luxury of time on their hand. Property, commodities, and equity are some of those options which help in building wealth. While property requires a larger commitment (in terms of amount), commodities and equity are more volatile. While they pose the challenge of good understanding and risk-taking abilities, they have the potential to offer better returns over the long term.


   In this context, you should also look at the option of saving on a regular basis as wealth creation is a long term process. If the recurring deposits and monthly contributions to public provident fund were the preferred options in the 1980s and 1990s, systematic investment plans (SIPs) have been the much talked-about options in the last decade. While the former allows wealth creation without much risk, the latter has the ability to beat inflation over the long term.


   Irrespective of the choice of product, investors who think of saving and investing at an early stage in life are sure to be winners.

 

Popular posts from this blog

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...

Avoid NFOs

  Don't get taken in by the flurry of new fund offers. You will be better off sticking to the tried and tested schemes.   For the past one year, to cash in on the bull run in equities, mutual fund houses have gone on a new fund offer (NFO) overdrive. But experts are unanimous in their advice: avoid NFOs . While past performance is not an indicator of how a fund will fare in the future, it does tell the investor how skilful the fund manager is. This crucial information is missing in an NFO. Not only is there no track record to judge an NFO by, many NFOs are similar to funds that already exist. If the new fund is similar to existing funds, you are better off investing in the latter. Around 67% of the new launches in 2014 were closed-end products. Investing in the NFO of a closed-end fund is doubly risky. In case the fund's performance is lacklustre, a closed-end fund does not allow you to exit. Even though closed-end funds are listed on the stock...

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...

Debt Mutual Fund Dividends are Taxable

DDT is deducted when a non-equity fund declares dividends. Equity and balanced fund dividends are tax-free The AMC is correct to deduct the dividend distribution tax (DDT) as it is mandated by tax laws. DDT in mutual funds is deducted every time a non-equity fund declares dividends. Equity fund and balanced fund dividends are tax-free . It is possible that you have invested in a non-equity fund for the first time or have received the dividend under a non-equity fund for the first time. That is why this is the first occasion when you have come across DDT.   The rate at which non-equity schemes deduct DDT has also gone up after the July 2014 budget. This is due to a change in calculation methodology. Earlier, if the fund has to declare a dividend of R 100, it used to make a provision for R 128.3, paying R 28.3 to the taxman and distributing the balance to the investor. This allowed the investor to bear less tax since the effective tax rate was 22.07 per ce...

Shift from Debt to Equity - Arbitrage Funds

   In addition to generating returns comparable with debt options, arbitrage funds also enjoy the tax advantage of equity funds.   Arbitrage fund investors had been worried about the category being clubbed under non equity funds in the recent Budget. As this did not happen, there is relief among them as they can continue to enjoy tax benefits. Arbitrage funds cash in on the opportunities that exist between the spot and the futures market. They pair trade--buy in the spot or cash market, while simultaneously locking-in a higher price for the same in the futures market. They pocket the difference when the sale actually happens. Their risk profile is very low--comparable to short term debt funds . Fund managers try to maintain their equity holdings in the cash market above the 65% mark, so that these schemes are classified as equity funds. Equity funds do not incur capital gains tax if held for more than one year and, if held for less than a year, sho...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now