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Be smart and invest wisely. Fundsupermart.com tells you how!
New Year begins with resolutions and plans for a better future. Managing money is critical for realising your goals. A good work-life balance is supplemented by effective asset-liability management, in other words, clever budgeting, keeping your credit card bills in check, paying your loan installments on time and investing wisely. The goals for every individual may vary from saving for an exotic vacation to supporting kid’s admission in a premier league college. In this article, we shall see how some basic investing principles can help you.
If at the age of 35, Prem wishes to retire with the same amount of money as Amar and increases his investment amount, how much will he have to shell out? To end up with an equal amount of accumulated wealth, Prem will have to contribute Rs. 37,000 every year which is again three times of the initial outgo. Thus, we can always start investing small amounts with top-ups or higher investments as and when markets or instruments look attractive for investing. To know how much you can gain at retirement, the tool ‘Forward Compounder’ is at your service. Simply enter your current savings, if any and future monthly installments or systematic investment amounts, to get the corpus at the end of 5 years, 10 years, 15 years, 20 years, 25 years and 30 years. Fiscal Free An important step towards being fiscal free is to be in control of your finances. The daily mundane routine leaves little time to fret over something as complicated as investing. Investors can prepare a simple budget in order to assess their discretionary as well as non-discretionary spending. Expenses for entertainment purpose like dining at restaurants, purchasing consumer electronics or luxury goods and miscellaneous expenditure on home renovation etc., fall under discretionary expenses. The basic necessities of everyday life comprise non-discretionary outlay. Budgeting will help you segregate your needs from your desires. The tool Budget Analyzer on Fundsupermart.co.in will help you with this! The annual investible funds at the end of the computation in the tool will give you a picture of the amount of money that can be set aside for investing after considering actual and anticipated expenses. Apart from this, create a contingency fund for an unforeseen emergency which should ideally be equal to 3-6 months’ of your salary. Goal setting is the second and most crucial step of being fiscal free. The qualitative aspect within goal setting is ensuring a decent standard of living post retirement or on termination of regular flow of income and the quantitative aspect is putting a figure to it. Also, there may be major commitments in a lifetime to reckon with, such as proceeds towards daughter’s wedding or down-payment for a new house or car. The tool ‘Crorepati Calculator’ not only helps you arrive at a figure but also tells you how to become a crorepati! The other calculation in the tool with respect to purchasing power takes into account the fall in value of Rs. 1 crore in absolute terms after certain number of years owing to factors like inflation, opportunity cost of money etc. Risk-Reward Trade-off Investment experts quite often decide allocation of funds to stocks, sectors and asset classes in their portfolio according to their estimate of how that stock, sector or asset class will perform in future. The overweight or underweight positions are determined by the buy, hold and sell strategy of the portfolio. To protect the portfolio’s downside due to fall in or negative performance of a particular stock or sector, the investment is spread across different securities. The concept of ‘Diversification’ has been discussed time and again but investors should bear in mind their risk profile before exposing themselves to different products and asset classes. Apart from knowing the security’s risk level, investors should be aware of their own appetite towards risk. To find out your risk profile, just answer a few questions in the tool ‘Risk Profiler’.
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Dhanashri Rane is part of iFAST Financial India Pvt Ltd |
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iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website. | ||||||||||||||||||||||||
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