How to Beat Inflation with Investment?

Beat Inflation with Investment

Inflation, in simple terms, refers to the increase in the prices of commodities and services. It has a direct impact on the time value of your money. It means that your wealth might not have the same value after a few years. For example, if you are paying INR 20000 as rent for a 3BHK house might increase to INR 30000 in the next five years for the same flat.

There is one thumb rule to understand the effects of inflation. It is known as the ‘Rule of 70’. It says divide 70 by the rate of inflation and it will give you the number of years by when the value of your wealth by 50% of its today’s value. For example, if the current rate of inflation is 5% and you have INR 40 lakhs. After 14 years (i.e., 70/5), the value will be INR 20 lakhs.

Beat Inflation with a Portfolio of Mutual Funds

Mutual funds are a class of assets that has become one of the most popular investment options. The most looked after feature of mutual funds is the benefit of diversification. Mutual funds allow investors the advantage to invest in multiple companies across different industries. It provides a safeguard against the risk of uncertainties. Diversification helps to minimize the risks while at the same time also average outs the returns. So, any losses in any particular sectors are adjusted through high performing stock in the same portfolio.

There are also a large variety of investment options that are available in the market. Growth funds are said to be one of the best performing mutual funds in inflationary periods. Apart from this, other categories help you to reap good returns on your investments.  In the past years, equity mutual funds have shown the potential to deliver an annual return of 11% to 14% in the long term. Mutual funds give you 2 investment options. The first is to make a one-time lump sum payment, the other is in the form of SIP. You can make regular investments into best performing, starting with just INR 500 per month.

Conclusion: Making regular investments in mutual fund schemes could be considered one of the best ways to overcome the effect of inflation on your investment. It provides returns higher than the rate of inflation and minimizes associated risk by diversifications.

11 Things You Should Know About SIP Mutual Funds

11 Things You Should Know About SIP Mutual Funds

Investing in markets is one of the most concerning decisions. As a traditional customer, you will think twice before making any large investment. But with the introduction of SIP, now the situations have changed. It is easy and convenient to make investments. Every year, the number of customers is increasing who look forward to bring their investment in SIP mutual funds. In this blog, we will give you a quick some features of SIP mutual funds.

To the customers who are just beginners in the market, SIP is a new word. SIP stands for a systematic investment plan. It is the most flexible way to invest in the market. The best thing about this plan is that you can invest per month rather than one lump sum amount. 

Eleven things you should know about SIP mutual funds:-

1. Amount of investment
SIP gives you the right to invest according to your requirements and convenience. You can start your investment with a minimum amount of Rs 100 or Rs 500 per month. A Small Amount of investment will not develop a financial burden on your head can easily maintain your financial balance.

SIP mutual funds can formulate monthly, annually, quarterly, and semi-annually. It develops a sense of saving habits among investors. Your saving habits play a vital role in the circulation of your money. Tax saving schemes also comes under SIP mutual funds.

SIP mutual funds are of various types. The most common type is a hybrid mutual fund. A Hybrid mutual fund is the one under which the investment portfolio is equally divided between equity and debt financial instruments. Other types of SIP funds are Flexi SIP, Step-up SIP, Perpetual SIP, etc.

4.Timing of the market
The timing indicates the ideal time frame, where the investors can gain a maximum of the benefit in the stock markets by purchasing more units of mutual funds when the prices are comparatively low. With SIP mutual funds, you can invest throughout the year and get better returns.

5.Investments of recurring nature
You have to make regular deposits, like recurring deposits. However, in RD the returns are linked with the bank FD rates, but in the case of mutual funds, you can invest in different financial instruments that link to market-related returns.

6.Regular investment
Investing in small amounts per month will make you a burden-free and disciplined market investor. You will become smarter about your expenses and start thinking to invest maximum. The regular investment feature of SIP will help you today and in the future.

The main objective of SIP mutual funds is to achieve long-term accumulation of wealth. When you invest through SIP, you invest in a disciplined manner without feeling the stress of market conditions. SIP mutual funds from time to time remind you of your investments and motivate you to move ahead.

8.Safe and sure
Mostly SIP is marked as a safe and sure way of investment and an efficient way to create wealth for the long-term. SIP is generally secure regarding mutual funds. SIP gets stuck to continuous money to earn a fixed percentage of commissions or returns. It makes you worthy of a safe and secure investment nature.

9.Best for the beginners
SIP mutual funds are the best choice for beginners who don’t have experience regarding the market as it averages out the price over some time. The funds in a mutual fund are sub-invested in various sectors. Through this, the investors get the benefit of diversification. You can consult your financial adviser for SIPs which offers several plans for the beginners. 

Financial experts regulate the SIP mutual funds. These professionals work on improving the returns of the funds. The SIP mutual fund is well managed and provides you with the best service in all possible ways.

11.Investment goal
Most people fail in investment activities due to a lack of market knowledge. SIP provides a wide range of investment options. With these various options, you develop yourself as a diversified and disciplined investor. The most common reason why people start investing is they need to save taxes. If you want to invest in SIP, you must target a specific goal. Determining the aim is an essential factor. It is necessary to know the reason behind your investment in SIP. Attach a money value to your goals. A Mutual fund (SIP) will provide you with the best returns than other investment option.

All the SIP features are present online. Online facilities provide complete services from starting till the end with ease of the internet all these services are working 24*7. Things like child education, marriage funds, home loans, retirement plans are necessary for one’s life. These require proper planning with adherence to the amount of wealth and period time. Each year the value of SIP changes. You have to understand the past, estimate the current values, and come up with future possibilities.

Best Ways To Utilize Diwali Bonus in 2021

Best Ways To Utilize Diwali Bonus in 2021

Festivals not only bring joy to us but also some extra money to our pockets. Being working people, nothing makes us happier than the Diwali bonus. Either private jobs or government jobs, a bonus has its own happiness. When we get our monthly salary with no extra pay, we set a budget for expenditures and savings but when we get an occasional bonus, we often don’t exactly know where and how to invest it properly. There are multiple alternatives available and choosing the right one is crucial.  

Saving helps us in many ways, either in the present or future. No matter whether you are saving Rs100 per month or Rs1000 per month it will be somehow advantageous to you. Apart from your basic budget, the bonus money, can help you fund your retirement plans. Retirement is inevitable and proper planning and a well-maintained fund is needed for it. Keeping in mind the future expectancy, it is one of the major ways to invest your bonus beneficially.

Certain situations arise for which we didn’t pre-plan, like the health emergency-accident or any illness. Today we are fit and healthy but, in the future, we never know what will happen. Medical facilities are one of the most expensive services- paying hospital bills, buying medicines, etc. utilizing your bonus to the best way to invest it in collecting emergency funds which will help you during a medical emergency and other related emergencies. Being an employee, your interest in long-term investments should never go off. Your bonus will be secured when invested in long term investments. Long term investments are future-oriented keeping in view the future possibilities, long term investments are most preferable and adopted ways to invest your bonus pay.

Another good way to invest your bonus is to pay off the sticky debts you are worried about for a long. You may use your bonus to pay your outstanding debt. This will reduce your burden to some extent. Paying debt should be your priority when it comes to investing the bonus. Investing in equity funds can also be a possible way to keep your bonus investment secure. Equity funds are also being the most sought-after way of investment by working employees with regards to the high returns. For people who have children, proper education is the most important thing you can provide to your children as it is the key to one’s life. When it comes to the education of your child, there is no compromise you can do. Part of your bonus can also be invested in saving for your child’s education. Education comes with a cost. Higher education needs a good amount of fees. Preparing a proper education plan and collecting funds for your child’s future is a beneficial way to invest your bonus money.

When money comes to your hand it’s purely your decision how and where to utilize it. Some use the money in buying assets like land, building, car, etc. while some people will move the money towards equity funds, emergency funds, etc. But according to a survey, a beneficial way to utilize the bonus money is to invest it for the future. It will come up to you with a good amount whenever you will be in need. So these were some of the most effective ways to put your bonus money on the right path to get the most benefit out of it.

5 Important Financial Tips for Payday

Financial Tips for Payday

How often have you experienced being broke just after a few days of receiving your salary? Well, it is not just you but hundreds of other people who find themselves in the same scenario. You may feel guilty that time but see yourself getting in the same position every time. If this sounds like you or someone you know, keep reading. 

1.Chart Out Your Monthly Budgets 

The first thing that everybody needs to do is to chart out their monthly budget. For this, check out your salary slip; it will give you a fair idea of deductions from your salary. You’ll get to know whether you need to make any investments. Remember, investments are made not only for wealth purposes but also to reduce annual tax liabilities. After you have understood your salary structure, list out the in-hand salary that you have received together with all the expenses this month. It helps you to get a structured estimate of your funds. 

2.Prioritize Your Investments and Expenses

This step includes planning and prioritizing your investments and expenditure for the month. Most people follow a ‘spend first, invest later’ approach which prefers taking out all the expenses they intend to incur and invest whatever amount is left. However, if you follow this, it may lead to extravagant spending. Leading financial advisor suggests an ‘invest first, spend later’ approach. It states that one should make investments first and utilize the left amount later. It builds a disciplined investment habit.  

3.Be Careful of Extravagant Offers & Schemes

Most retail companies offer heavy discount or other schemes at the last or start of the month. One should be careful of these schemes as it leads to spending more in the name of mere discounts or buying products that you do not even need. You should strictly adhere to the expense budget that you had made above. A lot of people unnecessarily buy subscriptions to applications and services that they don’t even use. Be cautious of all such wasteful expenses. 

4.Build Emergency Fund

Situations like the current Covid-19 pandemic where millions of people lost jobs, fell ill or even died are the reasons why it is crucial to maintain an emergency fund. It should be a large fund to accommodate all expenses of at least 6 to 12 months. It should cover all necessary payments that you will need to make for your livelihood, including food bills, electricity bill, water bill, insurance policy payments, EMIs. The amount should not sit idle. You can invest them in liquid funds. It saves your funds from the effects of inflation while ensuring withdrawal whenever you want.  

5.Simultaneously settle your debt

While managing your expenses and investment, make sure that you pay off outstanding loans and other liabilities. Paying out the debt reduces the burden on your income and ensures that there is no additional interest. Keeping the practice of paying out the loans and other liabilities ensures a debt-free future. 

Making a note of financial status is very important. Every individual shall be of utmost caution of all the expenses that he makes. Working out one’s budget on a spreadsheet or piece of paper can work out wonders for an individual. It provides a clear outline of earnings, investment and expenses. If followed diligently, this can make one a master of his financial status rather than driven by his sentiments.

Top 4 Signs You’re Dealing With An Investment Scam

Top 4 Signs You’re Dealing With An Investment Scam

Many people picture out successful investors to be riding in sleek cars, going to fancy dinners, sail on yachts, and just have the time of their lives. What many people don’t see is the hard work and discipline that goes into investing. 

But the flashy cars, upscale houses, glitz, and glamour can easily suck in an aspiring investor like you, especially when these things are hyped all over social media. When this happens, you can get blindsided, your emotions will run high, and then the next thing you know, you got roped into an investment scam. If you’re willing to go down a rabbit hole about real financial scams and experiences, this website is a great place to start with.

Like the victims of that website linked above, you may also find it difficult to spot an investment scam, especially when you’re new to investing. It’s even harder to detect if the supposed investment is being offered or introduced by someone you know or trust. 

Fortunately, there are early signs that can tell you that you’re dealing with an investment scam. Below are four aspects that you must watch out for:

1.Guaranteed High Returns Within A Short Time

When you’re guaranteed high returns within a short period of time and with no risks whatsoever, then run. This is the hallmark of an investment scam. Always remember that ‘if it sounds too good to be true, then it probably is.’ 

No legitimate bank or investment company can promise high returns within a short time since it would be unsustainable. Sure, you can earn high returns from stock investments and trading, but all these come at a huge risk. Such risks are usually made known to you by your broker, financial advisor, or are written in a contract.

Initially, investors of a financial scam get their returns as promised but since it’s impossible to maintain, the whole scheme eventually collapses. So, over time, investors will lose their money, except those who were able to withdraw their investments before the scheme went bust.

2.Recruiting Is Highly Encouraged

Let’s say your friend, who earned huge returns from a supposed investment company, has also urged you to invest. They tell you that you can enjoy high returns, too! Then, when you browsed through your Facebook feed, you saw that same friend sharing about their newfound wealth and is urging others to invest in the same company as well. It’s time to take a step back and take that as a red flag. 

Investment scams can confidently guarantee high returns at the start because their source of income is through new recruits who pour more money into them. Again, this isn’t sustainable. Once the recruits dry up, the money dries up as well. This system is also known as a Ponzi scheme.

3.Appeal To Emotions

This is a tactic used by ‘investors’ who are pressured to recruit or by the head of investment scams themselves. Scammers are pretty good at this, and they can use your desires and weaknesses to their utmost advantage. 

For example, if you have children, they’ll be saying that the returns will be enough to put your kids through college. They may also tell you that you can pay off your debts or mortgage once you trust the system and invest.

There are many ways for investment scammers to appeal and manipulate you through emotions. Sometimes, it comes in the form of social media posts, webinars, or online meetings. It’s easy to hype up a high lifestyle on Instagram, for example. You may also have entered a webinar where young people talk and flaunt how they went from zero to millions, then show off their mansions, fast cars, private jets, or yachts. 

All of these are simply appealing to your inner desires and emotions. Legitimate investment companies will show you figures, facts, and numbers instead. In other words, dealing with real investments is boring and it’s not hyped and flashy like what social media will make you believe it would be.

4.Details Are Vague

As an investor, it’s normal to ask questions. You’ll be putting your hard-earned money into this company, so it’s expected to have hesitations, clarifications, and questions. Real investment companies and potential investing partners will understand this. Again, they can show you hard facts, statistics, numbers, graphs, taxes, and market analysis to help you decide. These facts and information are also constantly updated and are distributed to investors quarterly or monthly if needed. In other words, legitimate investing companies are transparent.

But if you’re dealing with an investment scam, you’ll only be given vague details. Aside from guaranteeing high returns, nothing else will be explained to you. Other investors may even discourage you from asking hard questions. At most, they’ll just repeat their promises and even appeal to your emotions and desires again. If you prod for updates and details, the answers will be vague, and you may even be referred from one person to another without ever finding out the real deal.

Final Word

A quick way to check if an investment company is legitimate or not is to go to the Securities and Exchange Board and then verify if the company is indeed licensed or registered. If it’s not listed there, then it’s a scam for sure. 

However, some investment scam companies can still produce legitimate documents and proof of registration. But your due diligence shouldn’t stop there. You must still be wary and observant. Most of all, take note of the signs explained above and make sure that none of those are present.

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