SIP return beating other instrument..?

SIP return beating other instrument ?

Yes, as I always say that SIP (Systematic Investment Plan) is always good option for investment and create the wealth. You can read today’s Time of India, Mumbai edition on page no. 11 for your belief. Even worst of SIPs would have given you more than your PPF (Public Provident Funds) returns.

Regular investments in mutual fund equity schemes have been rewarding for investors in the last 15 years. Investments in equity schemes done through SIPs have outperformed traditional products such as Tax-saving fixed deposit and PPF.

Tax saving fixed deposits and PPF have returned a little over 9% every year in the last 20 years. Meanwhile, average returns in equity schemes through SIPs- an equivalent of recurring fixed deposits of banks over a 15 years period have been 21.54% every year with the worst performer giving 13.71%.

So I still advise to all of you start a some amount of SIP in equity mutual fund for your 15 -20 years goal like retirement, child education etc. It would be your most prudent investment decision. For more information you can touch with me also.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

The Magic of Early Investment

Have you started saving in early age?

Whenever I meet around 25-35 age of group and ask about saving and investment, they often don’t have clear view on this subject. For investment they totally depend on family, friends and relatives and friends. Most of them invest in traditional asset class like fix deposit, gold and real estate. Apart of this they even not bother about to know any other asset class. Every asset class has some virtue and drawback and not all asset class always suitable to all person anytime. Before and investment decision you should have proper knowledge about all available options.

I have discussed about many financial products in my earlier posts but today I want to discuss about the advantages of early saving. However, most people start investment after marriage or kids without realizing that they have started late. Here I share one example for understand the early saving concept. 

Two friends - Sachin and Mohit are of same age group of 35 and working in good reputed companies. One day they meet and discuss about family, future and finances. After discussion they were not able to arrive on a definite saving figure which was needed to save for their future. They had contacted their common friend Arvind, a financial planner and met him in his house on one Sunday. Sachin had started SIP of Rs 5,000 every month in a good equity scheme 9 year back when he was 26. Mohit had done the same thing but he has done it 5 year back when he was 30. Now the present value Sachin’s investment is 10.16 lakh whereas Mohit’s current investment value is now 4.19 lakh only. Both had invested same amount in same scheme but the only difference is time. Mohit had started after 4 year from Sachin’s investment and the difference in front of you.

Now they are planning for retirement at the age of 55 after 20 year. If they continue the same amount every month in the same scheme, at the time of retirement Sachin will get from scheme 1.91 (approx 2 Crore) and Mohit will get only 1.12 Crore. The difference in their amount is due to the delay cost of investment mere 4 year only. If Mohit could start with Sachin then he would also get the same amount 1.91 crore.

Now you people will think either these figure is wrong or there are some mistake. It is due to the power of compounding. Regarding ‘power of compounding’ renowned scientist Albert Einstein once said “Compound interest is the eighth wonder of the world. He, who understands it, earns it. He, who does not, pays it.”

Always remember my friends, time is the most important element in any investment. The investment amount does not matter whether it is small or huge. Starting investment in early age make different from those who start invest late.

If you have doubt about the numerical value in this post and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

SIP Role in Financial Planning

SIP Role in Financial Planning

When we make our financial plan, we set some future financial goals and to reach those goals we also make some investment strategy. Systematic Investment Plans (SIP) is the best way to invest for your goals. In SIP investment we invest a fix amount in predefined regular time frame. The amount would be deducted from your bank account on the fix date of your choice. You can choose any mode of payment like monthly, quarterly or your specified mode. Here we will discuss some SIP related points which will be beneficial for you.

Assign your financial goal:

As we have discussed about in earlier post that every investment should have some purpose. Link your each SIP to a particular financial goal like children’s marriage and education, your retirement corpus, purchase new vehicle or house, foreign holiday tour etc. Your asset mix should have according to your investment time frame like if your goal is more than 10 year far from now then your asset allocation more tilted towards equity.

SIP Timing:

Many investors want to time the share market, however it does not make any sense in the view of return. If you invest in 4 different funds then divide your SIP date in different weeks in a month. Doing this you will take benefit of the volatility of the market. Monthly SIP is the best mode for salaried person. There are many modes available in the schemes like fortnight, daily quarterly and half yearly etc.

Increase your SIP Amount:

Every year when your salary increase, your SIP amount also should increase in line with increment. Most of the investor miss it and stay invested as per earlier mandated amount. With each increment in your salary you should increase your SIP amount also. It is called step up SIP. If you do not have a particular amount for SIP in current situation for a particular future goal the go with step up SIP and increase SIP amount every year to achieve your goal.

Portfolio Revision:

Every year you should review your portfolio. It does not means that the changes in investment strategy. It means if you are approaching near to your goal then decrease your equity portfolio and transfer it towards debt to avoid market volatility. If a particular asset class has performed very well then you can rebalance your portfolio according to your time, age and goal.

Invest in SIP is the best strategy to achieve your financial freedom. If you have any query or doubt, feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Mantra for wealth creating in long term

When you have read the above heading before read the entire article it seems very exciting. Most of the person may think that there would be a unique formula for wealth creation in this article but I would share some important guideline and principle which seem very simple but I am sure implementing this is not so simple. For implementing these mantras of growing wealth, one need to understand the logic and the concept of wealth creating from root level. So now I am going to share with you some principal to become successful investor.

(A) Find a good financial planner and discuss with him about your near and future financial goal, your current asset and liabilities and other vital information asked by the planner. A financial planner will definitely help you to educate about basic money management, to know your risk profile, make financial plan, informed  investment decision and goal based financial plan.

(B) Make regular investment through SIP (Systematic Investment Plan) and get benefit of rupee cost averaging. Recommended SIP by your financial planner will help you to create wealth in long term. Patience is the key to successful investing. Stay invested through entire market cycle whether bull or bear. Never try to time the market, invest in both bull and bear market and reap the benefit of wealth creation.

(C) Be in touch with your planner and discuss about the market environment. If need then rebalance your portfolio according to market phase after discussing with your planner. 

(D) Stay away from complex product like ULIP. Keep simple approach towards investment, not indulge with these product which you don’t understand properly. Invest in those products which are transparent and you understand better.

(E) Never mix your insurance and investment need. There is not a single product in the market which fulfill your insurance and investment need both.

(F)  Choose your financial planner very carefully because it is like your family doctor. Ask educational and professional qualification and assess the knowledge of your planner.

(G) Start investment as early as possible. If you delay one year your investment you will loose as much as you cannot imagine. For understand it better discuss it with your planner.

(H) Don’t invest not only for tax deduction purpose, understand risk, return and your need also. Make your tax plan at the beginning of financial year and avoid march month tax saving race.

The above mentioned few mantras are essential for every successful investor. For understanding it in detail contact any qualified financial planner. Keep it in your mind and think about this before you going for any investment.

If you have any query regarding investment please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Prepation for after retirement

How to prepare Retirement Plan

In previous blog, we have discussed about the importance of retirement planning as the changing social and economic scenario. Today we will discuss how we should prepare retirement plan and what is the crucial factor should consider during the preparation of retirement plan. The most important thing it should start as early as possible at the beginning of the career.

First, we should make a list of current monthly expenses and annual expenses. After making list one should analyze how much these expenses are likely to increase or decrease after the retirement. After this consider inflation rate to these expenses to arrive approximate figure at the time of retirement. Estimate your and your partner’s life expectancy and calculate how much corpus needed for you after retirement till death to support your expenses.

Once we arrive to the corpus figure, now the question where we have to invest and how much amount have to invest for achieving this corpus figure. Evaluate the amount you need monthly or yearly to achieve target corpus. The most suitable invest avenue is mutual fund. Use the power of compounding by investment systematically in mutual fund through SIP plan. With the right mix of debt and equity one can successfully achieve the required retirement corpus. As your age reach near about to retirement age, reduce your equity exposure and shift it to debt systematically.

After making investment don’t divert from the plan, be disciplined and make investment regularly. In some time interval like annual you should revisit the plan and make sure your investment is on track. The most important thing is not to use your retirement corpus for your other requirement or before your retirement. Planning for retirement is not a rocket science. It is very simple step by step plan but this required only discipline and regular investing.

If you find difficulties to make your retirement plan then involve your Independent Financial Planner/advisor. Be in touch with your financial advisor during the entire investment period and clear your doubt investment and financial planning.

If you have any query regarding investment please feel free to ask.

 Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com