The secret of multiplying your investment in geometric progression lies in planning early by setting realistic targets and goals. Once they are envisioned, we should aspire and perspire to attain our objective of exceeding those financial targets and goals. There will be a number of stages of challenge that we would encounter till the goal is reached. Every one of those challenges are important and we should not rest till our objectives are realized.
There are many who get confused between dreams and goals. The secret of becoming a successful investor lies in distinguishing between dreams and goals. Dreams are imaginary while goals are dreams that encapsulate objectives which are realistic and time bound. Goals are mostly measurable as well.
It is only when we set goals coupled with objectives it will motivate you towards attainment of the same. Goals can be classified as short, medium and long term.
As suggested earlier, planning early is the key to building a reasonable corpus.
If you are a young Investor, you can opt for systematic investment plan (SIP) via Mutual Funds. SIPs give tremendous flexibility for the Investor in terms of duration as well size of the investment. You can approach any of your Registrar and Transfer Agent (RTA), like CAMS for registration of your SIPs.
However, SIP in an equity fund should never become an option for pursuing short term financial goals. For meeting your long term goals like child’s education, marriage, retirement etc., investors can consider investing in SIPs of equity funds.
Now onto the most important financial goal that is neglected by the Investor is the creation of an emergency fund. The prerequisite for this fund is it should be liquid or easily en-casheable. While investing in short term Fixed deposit is a good option, investors can also explore the possibility of investing in liquid fund which will serve the same purpose but with comparatively higher returns if we take into account the post tax returns. CAMS as RTA serves many Mutual Funds which have Liquid / Cash funds that offer better returns than your Savings Bank.
We find most Investors often grapple with the problem of the size of the corpus to be accumulated. But this would be entirely need based. For example, planning to save for your child’s education, you have to take into account the course of stream your child want to pursue at what age and the current cost of it.
Now to extrapolate it to the kind of corpus you should accumulate, you have to take into account the inflation factor. Financial advisers estimate that the education cost is often 3-5 percentage points above the retail inflation rate and so if the current inflation rate is 6%, you can safely estimate the education cost at 10% p.a.
Now with this rate, you have to calculate approximately the total corpus that you would be requiring for your child’s education in a particular stream of interest with two or three options. A good equity MF scheme can fetch you fantastic returns beating the monster of inflation. So, what you are waiting for ? Just calculate how much money you need to invest in a monthly SIP to achieve your target corpus.
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