For today's young earner, it is essential that he distinguishes between "saving" and "investing" as early as possible for taking healthy care of his wealth for the future.
1. "Saving" is setting aside money for use in the short-term, usually up to an year.
2. Such money is put in a money market fund or term deposit with very little risk.
3. This saved money has very little growth potential.
4. "Investing" is putting away money for use in the medium to long term.
5. It involves a measured degree of risk with the aim of growing your money.
6. It usually involves creating an investment strategy to achieve your future goals.
7. At the core is to be able to understand how much risk you can take with your money, not be greedy and readiness to remain disciplined for a few years.
8. Once the basics are in place, the going becomes much easier without being jittery.
9. When one invests for a long duration, and in a systematic way, the person actually eliminates a lot of risks that are associated with investing.
10. Thereafter, the power of compounding takes over to create long-term wealth for you to accomplish your goals and build your retirement corpus.
11. For a young regular earner in an organised sector today, the Sec 80C utilization should comprise only of EPF deduction (being a mandatory deduction by the employer) and an ELSS investment (preferably SIP, or even in lump sum), without any contribution whatsoever to VPF or PPF, or any other qualifying instrument.
12. EPF would accumulate the debt corpus, while ELSS would accumulate the equity corpus.
13. For investing the remaining net surplus savings for accumulating a healthy retirement corpus, invest in 1/2 balanced funds through the longest SIP tenures allowed in them by the respective fund houses, opting for SIP dates at the beginning of the month itself.
14. You could even opt for ELSS funds for lock-in purpose to curb any redeeming habit.
15. If you are conservate towards investments linked to equity, leading to fearful redemptions, you will have to become lesser risk-averse, as the only way to build an inflation-beating retirement corpus is to invest in equity instruments.
16. Your conservative risk profile could be due to a lesser understanding of how equity investments work in the long-term, so you can take small steps and dip your foot in the water carefully!
17. The key is to have a disciplined approach towards equity asset allocation and stick to investments suitable to your risk-appetite and aligned to your long-term investment goals like retirement.
18. For building a balanced portfolio for a healthy retirement corpus, you should ensure:
a) product suitability with your risk profile
b) portfolio quality is never compromised
c) diversification and accepting that there will be intermittent volatility , and
d) provision of appropriate time to the portfolio to deliver performance.
1. "Saving" is setting aside money for use in the short-term, usually up to an year.
2. Such money is put in a money market fund or term deposit with very little risk.
3. This saved money has very little growth potential.
4. "Investing" is putting away money for use in the medium to long term.
5. It involves a measured degree of risk with the aim of growing your money.
6. It usually involves creating an investment strategy to achieve your future goals.
7. At the core is to be able to understand how much risk you can take with your money, not be greedy and readiness to remain disciplined for a few years.
8. Once the basics are in place, the going becomes much easier without being jittery.
9. When one invests for a long duration, and in a systematic way, the person actually eliminates a lot of risks that are associated with investing.
10. Thereafter, the power of compounding takes over to create long-term wealth for you to accomplish your goals and build your retirement corpus.
11. For a young regular earner in an organised sector today, the Sec 80C utilization should comprise only of EPF deduction (being a mandatory deduction by the employer) and an ELSS investment (preferably SIP, or even in lump sum), without any contribution whatsoever to VPF or PPF, or any other qualifying instrument.
12. EPF would accumulate the debt corpus, while ELSS would accumulate the equity corpus.
13. For investing the remaining net surplus savings for accumulating a healthy retirement corpus, invest in 1/2 balanced funds through the longest SIP tenures allowed in them by the respective fund houses, opting for SIP dates at the beginning of the month itself.
14. You could even opt for ELSS funds for lock-in purpose to curb any redeeming habit.
15. If you are conservate towards investments linked to equity, leading to fearful redemptions, you will have to become lesser risk-averse, as the only way to build an inflation-beating retirement corpus is to invest in equity instruments.
16. Your conservative risk profile could be due to a lesser understanding of how equity investments work in the long-term, so you can take small steps and dip your foot in the water carefully!
17. The key is to have a disciplined approach towards equity asset allocation and stick to investments suitable to your risk-appetite and aligned to your long-term investment goals like retirement.
18. For building a balanced portfolio for a healthy retirement corpus, you should ensure:
a) product suitability with your risk profile
b) portfolio quality is never compromised
c) diversification and accepting that there will be intermittent volatility , and
d) provision of appropriate time to the portfolio to deliver performance.