A twenty something I know asked me….’I wish to Invest’ so here is what I told her/ him…
You are a new investor with a lot of enthusiasm for investing, so welcome to the world of investing. It is a nice world out there and you can increase your wealth by investing. Let us see why you should invest.
1. You are earning well, and have a surplus! – you are investing because you have a surplus. Face it for the first 5 months of your working life you were busy spending, having fun, buying gifts for your loved ones…and now suddenly you feel like investing. I am proud of you that in 5 months you realized the importance of investing. There are people who wait for 15 years before they invest!
2. You already are saving: the life insurance policy that your father took about 6 years ago – and for which you are paying the premium – is a lousy INVESTMENT product, but since the premium is low you should continue it for another 14 years. This is not an investment, but a saving product.
3. There is enough research to show that equities out perform other asset classes. In fact Jeremy Siegel says ‘Equities out perform other asset classes in 8/10 times in the US’. I would like to believe this will hold true in India over the next few decades.
4. Ocassionally the share market will do huge somersaults – and it will be scary. However when you read about equity markets and equip yourself about how the markets behave, you will realise that volatility is an opportunity not a threat.
5. Luckily for you your father is also an investor, hence you will not be actively discouraged from investing. I know of a girl who started with a 4k SIP – and was buckling under family pressure to stop. Luckily for her she has continued for the past 6 years and she is now reasonably happy with the SIP returns! So Funds are a good place to start, and SIP the safest route.
6. The more you read and learn the easier it will be for you to tell your banker why you think his/her suggestions are good for the bank and not for you.
will write more…as you ask…
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