New to Investing?
It is very important – probably crucial – to invest. Because life has constant and infinite needs. From daily essentials to comforts and luxuries. You need money just to survive each day. And almost everybody needs money to fund future plans - a new house, car or other gadgets, children’s education and marriage, holidays… even medical emergencies!
It’s a pity if you haven’t given investing a thought. But don’t worry - because you’re never too late. The best time to start is right here, right now!
You don’t require huge funds to become an investor. The key to growing your money is to start investing early and regularly. That’s because the power of compounding works best with the passage of time. Take this example
A corpus of Rs. 50 lacs at retirement (60 years) could be attained by investing as little as Rs. 2615 every month at a modest 6% p.a. for 25 years from age 20 through 45.
But if you delay, then to reach the same capital growth at age 60 will need the commitment of far greater funds.
That is, if one day, at age 35 you wake up and decide you want to have Rs. 50 lacs by age 60, you will have to invest almost three times the amount ie Rs. 7215 every month between ages 35 and 60, at the same rate of interest.
In the above example, by starting early, a total of about Rs. 7.84 lacs would grow to Rs. 50 lacs; while a delay of 15 years would require three times the amount ie Rs. 21.64 lacs to achieve similar results over an identical saving duration of 25 years.
Moreover, while starting early, you could stop investing at 45; by starting late, you have to continue saving right up to retirement.
So what’s the message? Very simple, very direct: Start investing now! Destimoney has lots of investment options to suit your risk profile.
Investing Options
In a sense, nobody is new to investing!
The day you put your money into a bank account, you began to invest. How? Simply because the bank gave you an interest on your deposited funds, which grew into a bigger amount.
However, putting money in a bank account is possibly the weakest way to invest your money, when there are so many avenues that can return far greater appreciation. Most of those avenues are available right here on the Destimoney website – and they have been made so simple, that anyone can invest in them.
Lets explore the options
One step ahead of parking your money in passive savings accounts, is to put it into Term or FIXED DEPOSITS.
While Fixed Deposits are relatively safe, the rate of interest often disappoints. In fact, experts say that, if the rate of interest at which your money grows is lower than the inflation rate, your invested wealth is actually eroding in value.
But don’t worry about technical and notional things. We promise to keep it simple, so let’s explore options that will give you better returns than Fixed Deposits.
Before we go further though, remember that greater return is often linked to greater risk.
The equity markets provide a wonderful opportunity to get your money to grow at a far higher rate of growth than fixed deposits. However, the risk involved requires you to think carefully before entering the stock markets.
That’s why there’s a beautiful compromise called MUTUAL FUNDS. With Mutual Funds, you are indirectly invested in the stock markets, yet all the decisions are made by experts, making your risk much lower. It’s like having your cake and eating it too.
Having said all that, those who have been bitten by the stock market bug, swear by the thrill of investing by themselves. Millions of people around the world invest directly in equity, tracking the markets daily, making their own decisions and accepting the ups and downs of it all.
Yet, be warned, the equity markets are for those who can stand losses just as easily as they can enjoy in the gains. Plus, it requires lots of discipline, dedicated time and understanding of how the whole thing works.
But if you have the time, inclination, investible surplus and most importantly, the discipline, then equity is an investment option that has the potential of making you wealthier than most other asset classes in the long term.
It has been observed, historically, that across any 20-year period over the past century, equities have almost consistently outstripped every other form of investment in percentage returns.
Financial experts advise that equity must be an important part of every individual’s portfolio – except the most risk averse. Again, the percentage of your entire corpus that you put into EQUITIES would depend on a variety of factors, including age, risk appetite, income flow, investment objectives, etc.
For the individual investor at least, the stock markets today are far more complex than they were before. That’s because nowadays, one can invest in derivatives as well. Despite being a relatively recent phenomenon, the derivatives segment has become extremely popular, clocking an average daily turnover well in excess of Rs. 35,000 crores, domestically.
Derivatives are financial instruments whose value is derived from some other asset. Commodities derivatives are linked to commodities such as wheat, sugar, cotton, rapeseed, paper, precious metals, etc. Financial derivatives are linked to stocks, indices, currency and interest rates.
As opposed to the ‘spot’ market (the regular stock market), where assets are traded at a ‘here-and-now’ price, derivatives are based on ‘predicting’ which way the underlying asset’s value will go over a specified period of time. In that sense, derivatives are a reflection of sentiment or perception on future market trends, and can potentially lead to a price discovery of the assets to which they are linked.
The most common types of DERIVATIVES are Futures and Options. A futures contract is an obligatory agreement between a buyer and a seller to trade the asset in question between them, at a market-determined price, on some specified future date.
On the other hand, options contracts literally provide an option whether to go through with the deal or not.
We’ve established, therefore, that equities represent probably the best investment opportunity: and by using a derivative strategy you can substantially manage the associated risk.
However, some investors may simply not have the time to understand markets or track them on a minute - to - minute basis. Yet they realize the importance of being invested in an asset class that, as mentioned, has almost consistently outperformed every other on a long-term and historic basis.
While the Mutual Fund route would be a possible option for such investors, the prospect of being in a thickly populated, one-size-fits-all fund hardly does justice to one’s capital adequacy. What someone with a sizable investible surplus, but no time, really needs is a market expert’s skills to invest exclusively for them.
That’s what Portfolio Management is all about.
It’s almost like having a specialist in your employ to manage and grow your capital. While you go about doing what you do best – generating more capital from your own professional or entrepreneurial exploits. It’s a win-win situation for you!
To kick-start the process here on Destimoney, simply click on this PORTFOLIO MANAGEMENT link.
Portfolio Management primarily revolves around passive (on your part) investing in equities. But extend the concept to all asset classes, and you’re talking Wealth Management. While it may involve tangible investment in asset classes such as stocks, bonds or real estate, it also has an advisory dimension to it; where high networth individuals can seek specialized financial advice on retail banking, estate planning, legal resources, insurance, tax and financial management
Wealth Management is critical to ensuring that your accumulated capital is not only protected, but continues to generate additional income long after you’ve become professionally inactive.
If you do not manage your wealth, you’d have to work every single day of your life to maintain your current lifestyle.
You could try to manage wealth yourself, but that’ll be an enormous task, given that you will never have access to all the factors affecting your investment decisions. WEALTH MANAGEMENT is best left to the experts.
So there you have it. The basics of investing and capital appreciation. But, there is still one dimension that cannot be ignored: Insurance!
In every sense, insurance is about risk management. Because, without insurance, you run the risk of putting in danger your present and future capital.
There are several kinds of insurance, which may be broadly categorized into life and non-life insurance. Life insurance specifically covers loss of life, while non-life may cover health, businesses, travel, vehicles, property, liability etc.
In these times, when the cost of living is going through the roof, insuring the family bread-earner is critical. It ensures that dependants are not suddenly exposed to the merciless financial realities of life.
It is never too early to take INSURANCE, but being even a moment late may be, well, too late!
Today, insurance is a basic need. As basic as food, clothing and shelter. But sometimes, the scope of needs may also expand into wants… such as buying a car or some fancy gadget.
Needs or wants, they all require money to fulfill. Thanks to loans, however, there is almost nothing that you want that you cannot get.
Of course, the single most popular reason for taking a loan is to buy a house. And why not? After all, a house is an investment too. The single biggest investment most people will ever make in their entire lifetime. And one whose value mostly appreciates over time.
Buying a house is stressful enough; taking a loan should not add to the stress. That’s why there are LOANS from Destimoney. Easy, hassle free, low on paperwork and quick.
That’s the long and short of it. Mostly short, because we promised to keep it as simple as possible. As you will have realized, finance, like anything else, can get very complicated as you dive deeper. However, for most people it’s important to just know the basics and move up from there.
Rest assured, whatever your investment needs, Destimoney probably has it. And if we don’t, then we will in due course.
What are you waiting for? Go ahead, explore the varied, exciting and beautiful world of investing. Through Destimoney. So simple, it’s amazing!