Long term and regular investment is the golden truth of the equity market and schemes based on it. Its better to invest rather than waiting for an opportunity to do so. At the same time, if you invest early and remain invested for a long time, you'll be getting future benefits. Better investment planning on regular basis always leads to a prosperous future.
Starting from school days, we listen to varied sayings and make use of it. Sometimes we forget that some of these sayings are directly related to our personal finance management. Everyone should always think of savings out of the earnings they have, instead of spending it and be left with nothing in critical times. There is a chance that due to downfall in equity market the share value may go down for some period of time, but later when the market rises , you may get double or treble the profit value for same investment.
We often hear about direct investment done in share market or indirect investment done through life insurance or mutual fund schemes. But most of the time we take a role of audience and clap for the winner. The reason for this, is we don't know how to play. But we forget that the winner's achievement is coming out of consistent efforts taken in form of regular investment. When we see some company has given record breaking returns in short span of time we get frustrated thinking 'just missed the bus'. But we lack the courage to stay invested in share market for longer time.
It is difficult to identify the company from such a big list that would give best returns. Most of the time we enter and start investing when the market is on top and withdraw and stop investing when the market is falling. Needles to stay, most of the investors have felt the heat due to this approach. It is very important to define goals we want to achieve out of our investment. Everyone wants to purchase the share when its price is at bottom and sale at the top. But this is a rare acumen. This is a reason world got only one Warren Buffet. But in due course of time it is proved that regular investment and staying invested are the keys of fortune. For instance, today the cost of 100 shares ofWipro, purchased in 1980 is Rs. 300 crores. We know in 1980 it was difficult to have liquidity to invest Rs. 10,000 and there were very few people in market to guide on market investments. But today times have changed, we have lots of investment opportunities. We can't just wait and watch for the best time for investment. As we know "timing" in a market is subjective and its precision is proved only after timing an exit. The early we start investing the more is the chance of good returns.
Many people think that we can make property by taking loans. But one should remember that when we purchase property worth Rs. 50,00,000/- by taking loan of Rs. 40,00,000/- what we have is just a paper worth Rs. 10,00,00/- that too mortgaged with the bank till we repay the loan. In today's rate of interest we might end up paying double of the principal amount by the time we repay entire loan. Best way is to pay maximum amount in form of down payment and go for minimal loan. This is possible only with disciplined investment.
In attempt to avoid minimal risk, we see many people running behind unknown financial institutions promising higher rate of interest. By taking some risk and showing courage we can see good growth in our invested amount. Historical data of the equity markets shows us a the rate of return is in the range of 15-27% for long term and regular investments. The accumulated amount will enable us to fight with inflation and still leave sufficient surplus to spend on property. There is one very popular saying 'If you have not risked anything in your life, you probably have risked everything in your life.
Reproduction of an article in Daily Sakal
No comments:
Post a Comment