Till today we all were heavily dependent on FDs for good returns, though they were not giving expected returns to beat the inflation.
In near future FD's Interest rates will be equivalent to US and Europe, i.e. 2 to 2.5%.
So for good returns we have one of the best and only option is Mutual Funds.
To achieve any of the goals of any family like child education, child marriage, retirement planning, wealth creation, dream house, dream car and dream vacation, MF is the only investment which will give you handsome returns if one invest thru SIPs or lumpsum investments in appropriate fund then he/she can achieve any of the above goals in appropriate time .
By ARUN TYAGI,Certified Mutual Fund Advisor
Mutual fund is a financial instrument which pools the money of different people and invests them in different financial securities like stocks, bonds etc. The Asset Management Company (AMC), i.e. the company which manages the mutual fund raises money from the public. The AMC then deploys the money by investing in different financial securities like stocks, bonds etc. The securities are selected keeping in mind the investment objective of the fund. For example, if the investment objective of the fund is capital appreciation, the fund will invest in shares of different companies listed on stock exchanges. If the investment objective of the fund is to generate income, then the fund will invest in fixed income securities that pay interest.
In a SIP, an investor has to set aside small amounts of money either monthly or quarterly and the amount of investment can be as low as Rs 500.
When you start investing, the main aim is to save enough money for the future. Generally, people tend to start from less amount. Investments always involve certain risk. But as the saying goes, "higher the risk, higher the returns".
However, there is one financial instrument which can help you reducing the risk and at the same time, will give you robust returns. Enter Systematic Investment Plan (SIPs)in mutual funds. In a SIP, an investor has to set aside small amounts of money either monthly or quarterly and the amount of investment can be as low as Rs 500.
For instance, generally, a person starts earning at the age of 23 years. If he keeps on investing a small amount regularly in SIPs, after say 20 years, he can become a "Crorepati".
Yes, you read it right. We tell you how.
Say you are investing Rs 6,000 in SIPs per month for 17 years with an expected rate of return of 20% per annum. This means, your investment amount is Rs 12,24,000 for the entire time period. At the time of maturity, which is after 17 years, your maturity amount will be Rs 1.01 crore. Clearly, your earning on investment will be Rs 89,04,992.