Bank FD v/s Banking Fund

Bank FD v/s Banking Fund

We Indian love very much keep deposit in bank FD. Since my childhood I have seen immense faith of people in bank FD because they all think that bank FD is the safest instrument on this earth to keep their hard earned money. Very few people know that the bank only give guarantee maximum Rs 1 lakh through insurance in case of any system collapse or bankruptcy. It means more than Rs 1 lakh in bank always in risk. However, there are very low chances to fail the bank because our central bank RBI is one of the top regulator in world. Every financial instrument have their own risk and reward. So we are going to do a small comparison between bank FD and banking fund.

For example a person invest Rs 1,00,000 in SBI bank FD and in a banking Fund on 20th May 2003. After 11 year the value of invested Rs 1 lakh in SBI bank FD grows up to Rs 2,66,190. On this amount we have to pay tax according to our income slab and bank deducts TDS direct at the time of withdrawing the money. Bank FD is a secure investment compare with other available instruments. It hardly beats the inflation. Therefore it is not a wealth creator.

In other hands, banking funds invest in banking stocks. After 11 year, the value of invested Rs 1 lakh grows up to Rs. 14,67,000. And the amazing thing that there is no TDS deduction and it is tax free. It means you have not to pay tax on your gain. The only risk is volatility because equity is always volatile and checks your patience. It is a wealth creator instrument for long term investor.

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.

Are you Mutual Fund Investor?

Are you Mutual fund Investor?

You may be think that this question is as simple or silly but in really it is very important question for your economic freedom and wealth creation. First of all if your answer is YES then I want to congratulate to all of you for participating in mutual fund schemes. Most of you are investing in XYZ amount in a particular scheme suggested by a friend or an agent without any target amount and also knowing without risk which is associated with your schemes.

In general, I have observed many investors consider mutual fund as share market investment only but this is not true. It also invests in debt instrument and fixed term deposit investment also. Unfortunately in India most of investor are not getting benefit from debt mutual fund also. People even do not know in which schemes they should invest either in equity schemes or debt schemes or hybrid schemes. They even do not bother to know about this and in some cases agent have not much knowledge about mutual fund schemes.

Many investors often lament that they had lost a lot of money in mutual fund which is suggested by someone else or randomly picked by themselves. It is due to lack of awareness and lack of understanding about mutual fund as a product.

In my view, mutual fund is the best investment option available in the financial market for any investment time frame. Before start investing in mutual fund you should decide your investment time horizon and target amount at the end of investment period. There are different types of schemes available in the market for different needs and investment horizon. You have to decide your investment time frame first. Your investment period may be from 1 week 20 years or even more years and accordingly you should invest in suitable schemes.

If you are not able to choose the right schemes or you don’t have time please contact an IFA (Independent Financial Adviser). We also help to the investor to choose the right mutual fund schemes. Believe me If you invest in disciplined manner after knowing the product you will definitely create a lot of wealth. There are many equity schemes which have generated multiple times return in 10 year or 15 year time period.

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

When should be invest in the shares?

When should be invest in shares ?

The above written question is in the mind of various investors. Unfortunately, many of us are not able to find the difference between saver and investor. India is country of great savers but poor investors. Most of us enter in share market for short term gain but become investor forcibly when the rate of our shares drops below from the purchasing price.

Investing require three main things. First is investment period, second is well understanding of the asset in which you are going to invest and third is know about the risk. In this article I will pick the 2 example of stocks which had created extra ordinary wealth.

In 1993 Infosys came with IPO of Rs 95 per share. If you had bought 100 shares of Infosys for Rs 9,500 at 1993, the value of that Rs 9,500 has become today Rs 5.05 crore.

Year	Corporate Action	Shares
1994	1:1 Bonus	200
1997	1:1 Bonus	400
1999	1:1 Bonus	800
Nov-99	Split to Rs 5 Face Value	1600
2004	3:1 Bonus	6400
2006	1:1 Bonus	12800
2014	1:1 Bonus	25600

  

The value of 25,600 share of Infosys today is 5.05 crore without including dividend. Keep in mind dividend is tax free amount which company gives to its shareholder.

The other wealth creator is Wipro. The IPO had come in 1980 Rs 100 per share. If you had bought 10 share of Wipro at that time worth Rs 1000 then, the value of that Rs 1000 has become today worth Rs 56.05 crore.

Year	Corporate Action	Shares
1981	1:1 Bonus	20
1985	1:1 Bonus	40
1986	Split to Rs10 Face Value	400
1987	1:1 Bonus	800
1989	1:1 Bonus	1600
1992	1:1 Bonus	3200
1995	1:1 Bonus	6400
1997	2:1 Bonus	19200
1999	Split to Rs 2 Face Value	96000
2004	2:1 Bonus	288000
2005	1:1 Bonus	576000
2010	2:3 Bonus	960000

The worth of Rs 1000 which you had invested in 1980 is Rs 56.05 crore today without including tax free dividend.

The above mentioned two example indicate the one thing very strongly that you should invest in shares with the view of long term goal like retirement kitty, children’s education and marriage etc. If you have not enough time to study of stocks then you should invest in large cap equity mutual fund.

Please do not try to time the market. For long term investor market is always good. For example, since last one year market has given decent 60% return but many investor has missed this market rally because they want time the market.

If you 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