What is Investment?

What is Investment?

Anything that increases your money is Investment; Some investment takes time and some provide instant returns

Let us see few examples of products that a salaried person can easily use to grow his wealth without disturbing their daily routine.


Opportunities:

1. Recurring Deposit
2. Fixed Deposit 
3. Mutual Funds
4. Direct Equity Investment 
5. Portfolio Management Services 
6. Unit Linked Insurance
7. Gold/Silver
8. Structured Products
9. Alternative Investment Fund
10. Private Equity

Lets us learn each of the 10 points mentioned above in a simple and easy way (we will cover 2 points in a blog)

RECURRING DEPOSIT (RD): 

One of the simplest form of investment with absolutely no danger or uncertainty. Every bank in India offers RD, all you need is a savings account. 

HOW DOES IT WORK?

As the name suggests; you can regularly invest a fixed amount monthly for the next 6/12/24/36+ months and get compounded fixed interest for the period

Example: I wanted to buy a Honda Activa that was costing 65000/. 

I started an RD worth 5000 for 12 months. On maturity (13th month), my contribution was Rs.60000 (5000*12) and I received Rs.65000/. I could easily buy my 1st Non-Gear Bike without any financial damage or interest payment for EMI Loan.

This is a perfect example of smart buying; I have seen many of my friends buying Bike, Mobile, Car etc on EMI. They end up paying 10-20 thousand as Interest to the bank. On the other hand, as we saw I made the bank pay me interest. (Contribution Rs. 60000; Return Rs. 65000) Profit 5000/.

HOW TO DO IT?

Just log into your internet banking and decide the tenure and amount you want to start with 

OR

Visit your Banks nearest branch and ask the service desk to initiate the RD for you.

Please Note: RD can also be done at your nearest Jewellery shop; they offer better rates. however, please do your due diligence before initiating your investment. 

We can plan an infinity income from RD with simple strategic planning (will write on the same in a future blog)

MY FEEDBACK:

When our end use of our money is fixed and we cannot postpone it. Eg: Kids school fees need to be every 24 months. For such needs and any other similar kind of requirements, RD is one of the best investment options; here we can systematically save and let our money compound over a period of time. We need not worry about market fluctuations.

2. Fixed Deposit:

A fixed deposit does what it says, offers you a fixed return, on a fixed date.

It is one of the simplest investment tool available in India. On the day of investment, you will be informed of everything ie. The final amount to be received and the date of return.

HOW DOES IT WORK?

We decide, what amount and for what period we want to keep the FD. Most of the banks allow making FDs as small as Rs 10000/. and the period is also flexible.

This is a powerful way to save money and earn interest too. It is very human to spend money if we know our account has a good balance. However, if we move this money to FD, naturally, we will end up saving.

As the old saying goes, “A Penny saved is a Penny earned”

HOW TO DO IT?

Log into your internet banking and decide the tenure and amount you want to start with

OR

Visit your Banks nearest branch and ask the service desk to initiate the FD for you.

Please Note: FD can also be done at your nearest Jewellery shop, and there are many corporates (Company) that offer better rates on fixed deposit. However, please do your due diligence before initiating your investment. Your Investment advisor should have a list of Corporate FD and providers.

MY FEEDBACK:

When the end use of our money is fixed and we cannot postpone it. Eg: I want to buy a House 3 yrs from now. For this and any other similar kind of requirements, FD is one of the best investment options. We need not worry about market fluctuations. 

As can when we get the money we can keep making FD ensuring all are maturing on or before our requirement date.

I will cover the other topics as we move forward. Feel free to post yur feedback back, queries below.