How To Become Rich In India

Divya Nair

07 Dec 2016

Like everyone, you too want to become rich. Sure, people who have ancestral property can become billionaires easily. But even a middle-class salaried individual like you can also be rich if you make your money work for you right. Have you ever thought had you been practicing the following points, how much money you would have made by now? Here are 6 ways to becoming rich in India -

Living Within Your Means

This means managing debt and learning to budget. This may be a stepping stone to achieve your financial goals, successfully accumulate money and grow wealthy. The biggest trap stopping people to save money is multi-national companies luring them to buy things they might not even need. Learning to live within our means leads to a freer life. Whereas, debt can be a burden. We need to learn to save first and spend second.

Creating An Emergency Fund

Keeping an emergency fund is always a good financial move as you may always need money for your day to day expenses. You can park some part of your savings in liquid funds. As the name suggests, they are completely liquid which means you can withdraw money anytime. Keeping some part of your savings in bank account might also be a considerable option.

Making Money From Stock Market

Investments in stock market offers good returns. However, stock market is a volatile space where no one can predict exact return or loss. Key to consistently making money in stock market is to have a long-term horizon for investments, have an investment plan, and have the discipline to stick to it.

Mutual Fund Investments

Risk-averse investors who find it difficult to dedicate time to study stock market can take the mutual fund route to invest in stocks. By carefully choosing the best mutual fund, an investor gets the benefit of diversification and liquidity as some of the mutual fund schemes are highly liquid and advantage of professional management. Through mutual funds, one does not have to put in a lump sum amount, instead he/she can start off with as low as Rs 1,000/month via SIP. Mutual funds can offer returns of around 12%-15%.

Rebalancing Portfolio

Rebalancing investment portfolio means realigning the weightage of a set of assets in a portfolio. The process of rebalancing involves periodically selling or buying assets in a portfolio so that the targeted level of asset allocation is maintained. For instance, an investor may decide that his investment mix should be 50% growth stocks, 20% value stocks and 30% bonds. But over time, asset classes vary in performance. In a year’s time or so, the portfolio balance starts shifting as one asset overperforms and another underperforms.

Becoming A Venture Capitalist

In an urge to double their profits, venture capitalists or angel investors provide capital to startup companies. For instance, many angel investors in the United States had invested their money in shares of Facebook, when the popular social networking website was relatively new in the industry. Now, these stocks worth millions and billions of valuation.

Conclusion - Sure creating wealth is not a cake walk. Becoming wealthy is the result of many attributes such as saving discipline, patience, investing surplus funds smartly and readjusting portfolio periodically. Adhering to these methods to get rich would certainly help you accumulate wealth in the long run.


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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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How To Become Rich In India

Divya Nair

07 Dec 2016

Like everyone, you too want to become rich. Sure, people who have ancestral property can become billionaires easily. But even a middle-class salaried individual like you can also be rich if you make your money work for you right. Have you ever thought had you been practicing the following points, how much money you would have made by now? Here are 6 ways to becoming rich in India -

Living Within Your Means

This means managing debt and learning to budget. This may be a stepping stone to achieve your financial goals, successfully accumulate money and grow wealthy. The biggest trap stopping people to save money is multi-national companies luring them to buy things they might not even need. Learning to live within our means leads to a freer life. Whereas, debt can be a burden. We need to learn to save first and spend second.

Creating An Emergency Fund

Keeping an emergency fund is always a good financial move as you may always need money for your day to day expenses. You can park some part of your savings in liquid funds. As the name suggests, they are completely liquid which means you can withdraw money anytime. Keeping some part of your savings in bank account might also be a considerable option.

Making Money From Stock Market

Investments in stock market offers good returns. However, stock market is a volatile space where no one can predict exact return or loss. Key to consistently making money in stock market is to have a long-term horizon for investments, have an investment plan, and have the discipline to stick to it.

Mutual Fund Investments

Risk-averse investors who find it difficult to dedicate time to study stock market can take the mutual fund route to invest in stocks. By carefully choosing the best mutual fund, an investor gets the benefit of diversification and liquidity as some of the mutual fund schemes are highly liquid and advantage of professional management. Through mutual funds, one does not have to put in a lump sum amount, instead he/she can start off with as low as Rs 1,000/month via SIP. Mutual funds can offer returns of around 12%-15%.

Rebalancing Portfolio

Rebalancing investment portfolio means realigning the weightage of a set of assets in a portfolio. The process of rebalancing involves periodically selling or buying assets in a portfolio so that the targeted level of asset allocation is maintained. For instance, an investor may decide that his investment mix should be 50% growth stocks, 20% value stocks and 30% bonds. But over time, asset classes vary in performance. In a year’s time or so, the portfolio balance starts shifting as one asset overperforms and another underperforms.

Becoming A Venture Capitalist

In an urge to double their profits, venture capitalists or angel investors provide capital to startup companies. For instance, many angel investors in the United States had invested their money in shares of Facebook, when the popular social networking website was relatively new in the industry. Now, these stocks worth millions and billions of valuation.

Conclusion - Sure creating wealth is not a cake walk. Becoming wealthy is the result of many attributes such as saving discipline, patience, investing surplus funds smartly and readjusting portfolio periodically. Adhering to these methods to get rich would certainly help you accumulate wealth in the long run.