24 April 2010

Multiply Your Money - Systematic Investment Plans

Money is not biggest thing in life but it is reasonably close to oxygen. And there is nothing wrong in trying to maximize your corpus. With the rising inflation and real estate reaching unrealistic limits, I always feel that I m left behind. I m not so sure what will my lifestyle and what kind of lifestyle I can afford when I retire. With my little experience in investing, I feel that we have few options like NSC, PPF, Fixed Deposits, Stocks, Real Estate, Mutual Funds and life insurance.

I am very big fan of Systematic Investment Plans because of the idea of discipline. A portion of your salary goes to stock market every month. If you ask any successful investor, he will tell you that the key to investing is discipline and investing in small chucks periodically. The simple reason why "periodic small chuck investing" works is that we buy when market is low, we also buy when the market is high and we sell when the market is higher. I have strong belief that a periodic investment (every month) of few thousands for 15-20 years in stock market gives 5-10 times the returns from fixed deposit. But there is so risk but the risk can be diversified or reduced by investing in different types of mutual funds every month.

To give you a perspective, I started to invest 3-4 years back when the market was high. We all know that market crashed and even now I have a returns between 20-50%. The high return is possible simply because I bought during market crash. If you are serious about building a corpus, I would seriously suggest you to enter into mutual funds every month. The old saying, "little drops make ocean" hold very much for systematic investment plan.

Of course, you need a good financial consultant who does more than collecting money from you. He should be able to give you ideas on investments. Anyone who is having a good portfolio of services in MF and contacts in fund houses is the right candidate. Though, I don't do this as business, I can point you to my financial consultant Mr. Anand Srinivasan if you want. With his help, I am able to build a good corpus even now and I m on track with my targets :-)

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