Don't keep cash idle at home. invest.
Money doesn't retain its value.
Inflation eats away at your savings, bit by bit. Historically, inflation in India has always been at a far higher level than in the developed countries. Over the last thirty years, it has varied over a wide range, but has rarely fallen below five or six per cent per year for a sustained period. The long-term average over this entire period is about eight per cent.
Eight per cent doesn't sound all that harmful. It just means that something worth Rs100 becomes Rs108.
However, that's the annual rate. The inflation rate is a compounding rate, and the inflation of one year feeds into that of the next year, and so on. This means that if you had saved Rs1 lakh in 1982 and just kept it in a drawer as cash all long, then it would be worth no more than Rs8,200 today, just 1/12th of its original value!
And don't think that the future is going to be any better. Currently, despite all the efforts of the Reserve Bank, inflation has stayed above seven per cent. Economists now say that high inflation is now 'structural', meaning it's integral to the Indian economy and will likely stay that way.
And that's why we need to not just save, but also to invest our savings. Investment means putting our money into some form whereby it will yield some gains. Most of us are familiar with the 'types of things' that we can invest in. These 'types of things' could be property, gold, bank deposits, shares and deposits. Anything into which we can put in money and have it grow can be called an investment.
Of course, just matching inflation should not be the goal of any smart investor. Anyone who takes the trouble to learn some basics and applies them sensibly, should be able to earn more than enough to retain the value of their money. Investments can become an independent source of income. And if you let this sum accumulate instead of using it as income then it can grow into a serious amount of wealth.
Take the example above. Suppose that same Rs1 lakh had been invested in 1982 in the shares of a group of leading companies so that their value grew along the same rate as the BSE Sensex. The money would today have grown to Rs37 lakh! This is far ahead of the rate of inflation. A sum of R37 lakh can buy you a lot more than what R1 lakh could have bought you in 1982.
Investing well over long periods of time will not just save you from inflation-- it can also make you rich. more
Inflation eats away at your savings, bit by bit. Historically, inflation in India has always been at a far higher level than in the developed countries. Over the last thirty years, it has varied over a wide range, but has rarely fallen below five or six per cent per year for a sustained period. The long-term average over this entire period is about eight per cent.
Eight per cent doesn't sound all that harmful. It just means that something worth Rs100 becomes Rs108.
However, that's the annual rate. The inflation rate is a compounding rate, and the inflation of one year feeds into that of the next year, and so on. This means that if you had saved Rs1 lakh in 1982 and just kept it in a drawer as cash all long, then it would be worth no more than Rs8,200 today, just 1/12th of its original value!
And don't think that the future is going to be any better. Currently, despite all the efforts of the Reserve Bank, inflation has stayed above seven per cent. Economists now say that high inflation is now 'structural', meaning it's integral to the Indian economy and will likely stay that way.
And that's why we need to not just save, but also to invest our savings. Investment means putting our money into some form whereby it will yield some gains. Most of us are familiar with the 'types of things' that we can invest in. These 'types of things' could be property, gold, bank deposits, shares and deposits. Anything into which we can put in money and have it grow can be called an investment.
Of course, just matching inflation should not be the goal of any smart investor. Anyone who takes the trouble to learn some basics and applies them sensibly, should be able to earn more than enough to retain the value of their money. Investments can become an independent source of income. And if you let this sum accumulate instead of using it as income then it can grow into a serious amount of wealth.
Take the example above. Suppose that same Rs1 lakh had been invested in 1982 in the shares of a group of leading companies so that their value grew along the same rate as the BSE Sensex. The money would today have grown to Rs37 lakh! This is far ahead of the rate of inflation. A sum of R37 lakh can buy you a lot more than what R1 lakh could have bought you in 1982.
Investing well over long periods of time will not just save you from inflation-- it can also make you rich. more
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I read the content of Sunita ji , it looks lucrative but reality is altogether different , as higher the risk better the return , to maximise the gain by increasing the investment in equity/debt folio .When we practically come across about investment thru MF/sensex we find lot of corollary which marks that inflation beat all the way of investment of MF as when we enter in equity market , market scenario beat the turn and so often we loose badly .Similar trend noted for debt also despite less risk but gain becomes negligible. So important is stabilise the market no advisor can help if market is not stable . Growth patterns comes out of government efforts and results are noticed later , theories become lucrative initially but at last market stability is must. more
May 11
Land is one of the asset class to invest but it lacks liquidity. Also need big money. Buying or selling is not very easy. Market though volatile has given returns. Since the beginning of time, when Sensex was born (1979), pick any 7-year period, you will notice that there are only 3 instances when the return was negative. Extend that time period to 10 years, and the number of instances of negative return reduces to one. Extend the time period to 15, 20, 25, and 30 years, and you will see there is not a single instance of negative return! From 1979 we have seen many political changes, wars, assassinations of political leaders still market is moving forward. Gold is also a asset class where people can invest certain portion. But generally gold becomes dead investments as we Indian have lot of emotional values to Gold. So selling becomes very difficult. Mutual Fund investment is SEBI regulated, professional person manages your funds, portfolio is transparent, liquidity is easy, returns are beating inflation. Then whats the worry? On every step we take risk to live why not to grow our money? Be bold, find out good advisor and start investing, as time is the key to get compounding returns. Compounding return is the 8th wonder. more
May 11
better to invest in land only. Market is too risky and one small political turmoil can wipe out all gains in a day. May be gold as it will become scare in future. more
May 11
Mr. Sanjay Kumar Every investor while investing wishes to maximise his returns while minimising his risk. Asset Allocation and Superior scheme selection are time tested proven ways for doing the same. But time and again it has been proven that for an investor to manage his asset allocation and select superior schemes is extremely tough and difficult to execute due to operational and behavioural reasons. We have come up with Mutual Fund Automated Portfolio Rebalancing System - MARS - which tries to overcome these issues for investors. The process is system driven and operationally smooth, it also helps weed out behavioural biases. MARS gives a wide array of portfolios to choose from to the investor based on his risk appetite. The asset allocation between equity and debt would vary depending on the risk in the equity markets; higher the risk, lower will be the allocation into equities and vice versa. Client can select model portfolio(s) depending on his requirements and investment needs. Client get well researched mutual fund schemes in his portfolio. Simple execution tools for portfolio rebalancing. Enhanced returns resulting from disciplined asset allocation. MARS need Demate account with us. I wrote this as many senior citizens who are otherwise smart, are not taking smart move for their hard earned money. Taking calculative risk is the need of the hour. Be financially smart. more
May 10
As long as salaries are not reduced heavily, nothing will happen except looting of ATM and increase in crime. All salaries are obnoxious and disproportionate with work content. more
May 10
