Why you are investing? Is the most important question you need to ask yourself before investing. Answers may differ but earning something more or making income from money are few important. In any case, where to Invest is important question as the right Asset allocation or Asset mix is deciding factor.
One more question is what is minimum return from Investment? What is Risk supposed to taken? You need to take care while making IPS (Investment statement)
Interestingly, I found interesting tweet from one Respected person.
Check out @NagpalManoj’ Tweet
It was a poll. But the tweet highlight some factor which we need to taken care of while Investing.
- It highlights Inflation factor. The value of ₹5 lk will reduce with time. So if you want to keep that value same what is minimum return you need to earn? 7.5% around.
- There is always need of money from banks and financial institutions so if you keep money with them they will give you slightly high Return then inflation. Yes you will make money but not sufficient. We Call them fixed income.
- Next is gold. Basically it is not investment and hedge against inflation. Not applicable today but before 1977, many Central Banks attached value of gold and currency. So indirectly say if you have 1 gr or pound of gold, there is value which you will guarantee by Central Bank like Fed or RBI. It is Good to keep them on portfolio but not as investment. There are many ways to Hedge your portfolio. Gold is one out of it.
- Last and most importantly. When someone manufactur something from Commodities or give services, it is creation of wealth. In simple words, if you want to make wealth it will happen only with Equity. Just check the difference in between first and last option. It is sufficient big. Infact here only Sensex is taken as option. But there are many more stocks which makes more wealth then SENSEX. Choose right one and sell at right time. Repeat the process and you will be rich.
Going to end with thanks to Manoj Nagpal Sir. It’s all because if him, I am writing this post. Was planning to write about it but it was difficult to present it. His tweet makes it easier for me.
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About Ashutosh Tilak
Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me email@example.com or @androidashu & @InsideFinanc on twitter
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