Diwali: Shubharambh for investing

  • Posted By : reliancesmartmoney.com
  • Monday Oct 15, 2018

Diwali is the festival of light, joy and happiness. Moreover, according to mythology, it an auspicious day to start new ventures. It is also the festival when people pray to Goddess Lakshmi for wealth and prosperity. So, if you haven’t started investing yet, there is no better day than Diwali to begin your investment journey.

Start investing now

There’s an old Chinese proverb that goes: “The best time to plant a tree was twenty years ago. The second best time is now.” This nugget of wisdom is very applicable to the world of investments. By planting the seeds of investments early, you can see your wealth grow right in front of your eyes. And when the time comes, you can enjoy the fruits of your returns. This doesn’t mean you go back in time and start investing to earn good returns today (possible once a time machine is created). Instead, it means that the best time to start investing is today. The earlier you start investing, the better your long-term returns.

No investment amount is small

Many people think they need a large corpus of money to start investing, which is why it is one of the biggest reasons they postpone their investments. This is not the right strategy for investing your money. No investment is small. Many mutual fund  houses allow you to start your investment journey with as little as Rs. 500 – Rs. 1,000 per month. In fact, the right strategy is to begin investing right away, regardless of how much money you save. These small investments balloon into a large corpus over time due to compounding. In investments, compounding is the process where the returns you earn, in turn, earn returns for you.

Here is a simple example to illustrate the point.

Imagine that at the age of 30, you start investing an amount of Rs. 3,000 in a mutual fund each month. By the time you retire at 60, you can earn a tidysum of Rs. 1.1 crore (assuming a 12% rate of return). On the other hand, let’s assume you delay investing for a ten-year period. Now, even if you invest Rs. 8,000 per month, you would end up with Rs. 80 lakh by the time you retire. This is the power of compounding.

Long-term investment options for you

Early investment options for the long-term include stocks and equity mutual funds . Investing in the stock market might seem like a risky proposition. But when you invest for the long term, it is actually a safe investment option. The overall risk reduces, and your money has excellent potential to multiply over the long run. Blue chip companies are perhaps the ideal stocks for starters. They are relatively less volatile and offer regular dividends. 

On the other hand, you could simply start investing in equity mutual funds. All you need to do is invest a fixed amount of money regularly in the fund through a Systematic Investment Plan (SIP). Here, you earn more fund units when the price is low and fewer units when the price goes up. This is known as Rupee Cost Averaging, and it reduces your volatility and helps you earn higher returns in the long term.

So, this Diwali when you are buying new clothes, crackers and sweets, remember to put aside a small portion of your savings towards investments. Start investing (don’t procrastinate) and see your returns grow into a large lump sum over time.  Open your account and invest with reliancesmartmoney.com, a one-stop shop for all your investment needs.

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