Hey guys!!
Today's activity is in doing domestic chores, walking in my balcony in the evening. Done some pushups and stretching too.
This Quarantine and self isolation is definitely giving us time introspect ourselves in some aspects atleast. I have been doing same and want to share some key points from my study.
Diversification of Funds:-
It is very important to know how to invest wisely right from the beginning of your initial earning. I remember one of my teachers saying that his friend brought colgate a toothpaste brand at 10 bucks per share in 1990 and now it is around 1500 bucks per share.
Diversification is nothing but investing your money into different sources to mitigate risk. Different sources may be tax saving schemes, equity shares, debt and government bonds and commodities like gold and silver etc, Fixed deposits.
After doing some research I have followed the following pattern in investing my savings:-
Mutual Funds: ( 4 Types- Tax savings, debt and bonds, equity, balanced) I have invested 35% in Tax Saving Mutual Funds. There is provision by government of India that you can save upto 150000 rs in savings which would be deducted from your net income. As per my earnings and slab applicable I getting a tax benefit of 46000 rs. By doing this I'm saving 46000 directly which is around 30% of my total savings. Above that MFs are expected to grow by a minimum of 16%-30% in next 3-5 years. Above 30% every year I'm getting 15%-30% extra growth. Even though growth is not guaranteed I'm still save 46000 bucks every year which is a handsome return. There is a lockin period of 3 years. That means once invested you cannot take out your funds before 3 years.
Equity Mutual Funds: 35% of investment is into equities. Generally Mutual Funds has benefit of investing into different sectors there by compensating the up downs in different sectors. If one sector goes it can be balanced by other sectors. This is risk investment and involves lot of market study. I have Chosed mutual fund with this share holding pattern: Financial sector-34%, FMCG-10%, Technology-10%,services-8%, Health and pharmaceutical-8%, Energy-6%, services-4%, communication-4%, Auto industry-4%, Cash holding-3% and remaining in others. This mutual fund has only Equity shares of leaders in their respective sectors. Therefore I think minimum risk is involved with stable returns.
Fixed deposits:- 15% of my funds are into Fixed deposits. This is the most safe investment with minimum returns. Generally you give your money to banks and they give assured return of 6-8% depending upon the bank and your association with bank. Fixed deposits also not taxable upto 150000 rs At the end of the financial year, I check whether I have total savings of 150000 or not and invest remaining amount in Fixed deposits if there is any shortfall. Right now I have 20% holdings In deposits. Lock in period is 5 years.
Provident fund and statutory:- As per policies of goverment of India , 12.5 percent of your basic income will be held by government to return it during your retirement with interest. Your employer pays same amount to goverment under this scheme. So a total of 25% of your basic salary will get accumulated till your retirement and entire amount will be returned with 8.5% to 10% interest.
Of all the investments, investments with banks are the safest ones but are not much profitable as sometimes inflation has gone above 5% a year after which this investment brings nothing.
Investment in stocks are much profitable or may create huge losses but if invested with proper market research for a longer period can bring you good returns. This investment is less effected by inflation.
Sharing is Caring!!
May post any other good investment options!!
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