Become a Crorepati with 15*15*15 Rule

Become a Crorepati with 15*15*15 Rule

The title seems to be a calculating mistake or some kind of an exaggeration. But when we talk  about the Indian stock markets and its returns, these quants seem to be digestible. One can  easily amass a gigantic corpus of Rs 1 crore if you invest only Rs 15K per month. Lets’ discuss  the rule of 15x15x15 and the compound interest mantra behind the success of investment king “Warren Buffet”. 

The magic of compounding and the statement title can be easily explained with the help of an  example further. Assume an investor is investing Rs 15000 per month for 15 years and  generating 15% rate of returns. This will result in the accumulated wealth of Rs 1.00 crore (Rs  1,00,27,601). SIP Calculator. Not only this, as per  compounding principle, if we apply the same returns and same contribution for 15 more years 

i.e. 30 years in totality, the amount which an investor will accumulate increases further  exponentially. The rule 15*15*30, as they call, helps you accumulate Rs 10.38 Crore (Rs  103849194). SIP Calculator. Double the time period with  doubling the investment amount but the return is tenfold. 

This is the power of compounding. As per the rule, if one invests Rs 15000 per month via SIP in  equity mutual fund that generates an average 15% returns, the investor is likely to become a  Crorepati. The total investments for 180 months of Rs. 15k each turns out to be Rs 27 lakhs.  The periodic investments generate the profit of Rs 73 lacs. 

Similarly, if the young investor increases the period by another 15 years, the wealth increases  10 times. Thus, amount invested in 30 years is Rs 54 lakhs i.e. Rs 15000 for 360 months and the  Profit earned above investments is Rs 9.84 Crore. 

This effect clearly says the earlier the better. The sooner one starts investing; the more wealth  one can accumulate with time. Love begets love, similarly, money begets money, and its progeny can generate more. Compounding gives a multiplier effect to the invested amount whereby the  initial capital gets interest for the first year, and in subsequent years, even the interest  becomes the principal for the upcoming years which generates more interest in addition which  makes it more powerful and lucrative. 

To conclude, we can say that, compounding is a long-term strategy. VSRK suggests mutual funds  because of the features such as flexibility of switching from category to other, redemption at  any time if required, a high degree of transparency, and most importantly, the simplest means  to play in the equity market. To take advantage of compounding, all you can do is to start  investing in the early years of life.

Should I stop SIP at Market High?

Should I stop SIP at Market High

The stock markets are making all-time highs. Many think – too fast, too soon! We could sense that all those questions are back such as should I stop my SIPs? Or should I pull out money invested in my funds? Is the time right to add more funds to stocks? Or should invest in gold/real estate? Now the problem arises is that what should be done to find the correct answers for above stated what shall be done. Investing success is about 99% temperament and only 1% about where you invest.

We have huge ocean of investment avenues and various hot ideas that keep floating around, the question is how to react in such times. It is very well said, “Your biggest enemy is yourself.” That’s where thought process of investors comes into picture. Think of a state of mind as a predefined thinking guide but not as a shortcut to meet goals. It is something that makes you behave in a certain manner.

As far as investing and wealth is concerned, the model that works is Asset Allocation. It acts as a FOMO antidote. For your information, FOMO is Feeling of Missing out. At any time, it is difficult to know which investment is best. Asset Allocation allows us to take a chunk of several avenues that is worth investing in and market cycles does wonders.

Any investor rebalances with time, to check that did the portfolio was a thumb-up or a thumb-down. Don’t stress on the positioning of the market, or if product is expensive to get into or get out of.  The idea of allocating in various types of investments wherein few can be highly volatile, & others less. Some active, some passive. It helps you diversify which encourages prudence, risk management and good investment practices.

We live in a world of Volatility, Uncertainty, Complexity and Ambiguity. A diversified portfolio, it acts as a cushion from the impact of unknowns. Investor is aware that there is a chance of finding comfort as the other ones are working towards long term accumulation.

It gets you to act. The portfolio is to be rebalanced periodically based on the rules set before, without getting mixed up in present emotions. It helps in getting Behavioral Alpha. Investments when managed well, the alpha is assured. One never pulls out of markets when it’s all-time high. One never stops SIPs. Invest when there is blood around. One should patiently move from one asset to another, without a fuss.

VSRK suggests that even when markets are at all-time highs, our experts tells us to continue investments as per allocations. Be active in SIPs. Rebalancing of asset allocation is better but one can sell the chunk of the money that is needed urgently. For lumpsum investing, consider the kind of a stomach you have in terms of funds and risk appetite.

8 Best Reasons to Continue Your SIP

Reasons to Continue Your SIP

In these abysmal times of ongoing pandemic and unstable market dynamics, the markets have been highly affected due to the investor consternation and fall in demand. It is said that around 59 lakh SIPs have been stopped, however, it has been observed that at the time when many SIPs have been either stopped or paused there has been additional inflow made by some investors cushioning the SIPs inflow. We would like to suggest some reasons you should consider before deciding whether you should continue your investment in SIPs or not.

Lower Valuation
One of the prime causes leading to the discontinuation of SIPs is the fall in the values of your investment. Before going more into this let’s briefly talk about the nature of the bearish phase that the country is going through at the moment. The important characteristic of the bearish phase is that it is temporary and after the end of such phase there is always a bullish market where the overall market is highly satisfying. This means that currently, the stocks are available at lower prices than what they were at a month ago. Such circumstances could be seen as a chance to invest in more units at lower costs.

Constant Benefits from Power of Compounding
Known as the 8th wonder of the world, Compounding is one of the major reasons to continue investing irrespective of the market volatility. By making regular investments and reinvestment of the returns generated on such investment, the power of compounding helps the investors in making contented returns.

Essence of long-term growth
The markets have always been volatile and subject to uneven fluctuations, however, one thing that has always been static in this environment is the immense potential for wealth creation. It is said that in the past 40 years irrespective of multiple recessions and downfall of the economy at various situations the investors have gained an overall 16% compounded annual returns in S&P BSE Sensex since its inception.

Lack of Re-Investment Alternatives
If one decides to withdraw the funds there should be an alternative for the use for such finds otherwise the main objective of investing it in the first place won’t be accomplished. If the sole reason was the factor of fall in markets it is advisable to consult your professional fund manager before making any rash decisions. 

Opportunity to earn more
As discussed earlier the bearish phases do not sustain for long, which allows you to buy some good stocks at currently low market prices but apart from this there is an additional chance of averaging out the total cost of portfolio. It is highly possible that due to high market prices you might have overpaid for your holdings and now could be a good time to make up for the additional costs incurred.

What is Systematic Investment Plan (SIP) ?

Systematic Investment Plan

A mutual fund is one of the most popular modes of investment opt by investors desirous of making good returns on the same. There are generally only 2 ways to invest in a mutual funds scheme- Lump sum investment and Systematic Investment Plan.

Lump-sum investment refers to the investment of a good sum of money once into the scheme. It is suitable for times when you have a free load of cash in hand with you. However, the availability of a comparatively huge sum of money is not very common and this is the reason why many potential investors were unable to make investments. 

Systematic Investment Plan (SIP) was brought as a mean of making a systematic and regular investment. This requires the investors to invest a fixed amount of funds at stated intervals, regularly. This has dealt with the inability of huge sums and allows the common man a chance to invest. 

The return from the mutual funds depends on the market value of the securities present in the portfolio represented by the Net Asset Value (NAV) of the mutual fund scheme. Hence, the NAV keeps fluctuating on a daily basis, which is more prominent under equity mutual funds.

4 Tips to Manage Your SIPs in Lockdown

Manage Your SIPs in Lockdown

We understand that due to these turbulent times when there is almost no trade, business are having huge losses and thousands of people are losing jobs it has become very difficult to manage your SIPs (systematic investment plan). We would like to advise you the following tips to manage your SIPs effectively without knowing its shortcoming or a better alternative.

  • You Can Invest More Without Starting Another SIP
    If you intend to take advantage of such a situation where the markets are down you can. You don’t need to start an additional SIP alternatively you can opt for a top-up.
  • You Can Pause Payments
    Unlike the above case, you might find yourself in a situation where the payment is not possible due to any reason maybe loss of job, receipt of lower salary or maybe the intend to keep liquidity. In such situations you have the option to cancel the SIP; however there is an alternative to pause it. You may pause the payment instead of cancelling the same.
  • Consider the Exit Load
    Some people may be thinking of cancelling their SIP. If you cancel your SIP before the said lock-in period, a charge known as exit load shall be chargeable. Each SIP has its own lock-in period and exit load
  • Tax applicability
    When you opt to sell your investment, capital gains are applicable. Period of holding for the purpose of Long-term capital gain is as per the Income Tax act. Last we checked it was one year for equity funds and three years for debt, gold and other securities.

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