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Friday, November 19, 2010
Little Drops of Water Make a Mightly Ocean
Dear Srikanth sir,
I am in awe of your writings and would appreciate if you can guide a poor man like me. My earnings don’t leave with enough savings. Still, with great sacrifice on my part, I can invest 700rs per month. Is this too little? Should I consider investing in safe options like Bank FD; insurance, etc…Guide me to have some decent lump sum in around 20-25 years time. Please.
SRIKANTH MATRUBAI guides:
First of all, I appreciate your effort to save the money as "Money Saved is Money Earned"
Saving is nothing but “spending less than earned income”.
Rs.700 is not a small amount at all.Better late than never, better small than no investment at all.
Do you know that if you had invested just Rs.100 in Reliance Growth Fund for the last 181 months, your investment of Rs.18100 would now have gone to, hold your breath, Rs.3,26,888!!!!!
Yes, you read it right…your investment of a paltry of Rs.100 would have grown to more than 3 Lakhs of rupees….!!!!!!
So, if Rs.100 can achieve this much, your Rs.700 too could earn a lot and can easily make you a Crorepati..
Ignore people who tell you to invest in Recurring deposits or buy Gold or even consider Insurance.
Insurance is NOT AN INVESTMENT.
People do not advise you about Mutual Funds because they get ZERO Commission on Mutual Funds where as in Insurance they get about 40% (the recent IRDA has brought this down to about 10%, but still quite a deal) and in PostOffice and other investment avenues, they get at the least 2%.
Gold at best gives a return on par with Inflation (even though the last few years have been an exception). With Recurring Deposit, you actually 'LOSE' your Capital when you consider Inflation and Taxes.
The Best option is 'MUTUAL FUNDS".
Reliance, SBI and Sundaram Mutual Funds have SIP for as low as Rs.100.
Sip investments allow you to start small and accumulate huge.
If possible, add another Rs.50 to your savings.
My advise for you is to split this Rs.700 into say about 4-5 Schemes and invest as advised below every month.
My preferred Funds would be
1.Reliance Growth Fund – Rs.100
2.Reliance Regular Savings Fund- Equity – Rs.100
3.SBI Magnum Contra Fund – Rs.100
4. Sundaram Mid Cap Fund – Rs.250
5. SBI Magnum Balanced Fund – Rs.100
6. Reliance Equity Opportunities Fund – Rs.100
These Funds are a Good mixture of Large Cap, Diversified and Balanced Funds with a bias towards Conservative investment.