Wealth creation is a much bigger and broader goal than say ‘children’s education funding’ or ‘retirement planning’ – those are sub goals – of course.

So every big goal is met by doing a lot of small steps – here are some of those steps. Not saying they are ENOUGH, but saying that it is a good beginning.

1. Look for a good fund manager: the importance of a good fund manager is rarely brought out by the financial press. There is just too much emphasis on costs. Hdfc ULIP (when I bought it) had the lowest amc charges – of just 0.8% – however the benefit of low charges was lost by poor fund management skills. I pay a much higher brokerage than you do (and there are at least 3 brokerage houses willing to do it FREE for me). Frankly, as an investor, I could not and need not care about the brokerage rates AT ALL. The quality of advice that I get makes it worth while.

2. Having said point number 1, make sure that among the good fund managers (I mean the amc, not the individual) make sure that the costs are reasonable. Too much should not be lost in the premium of good fund management!!

3. Start Today: this has been said so many times, that it does not need any explanation. Just pick up the phone and call, or go online and invest. NOW.

4. Automate your investing: SIP – again enough has been said. Do not get distracted by value sip and variable sip…and all such concepts. You do not need to tweak it. Pick a fund, pick a date, pick an amount – and DO it, not today, NOW. This article can wait, your investment cannot.

5. Find areas in your expenditure that can be cut – so that you can increase the SIP amount – even if you can improve by Rs. 300 per month, DO IT – every drop counts.

6. Hdfc and Icici mutual funds allow you to do a RISING sip – so you could charge with Rs. 5000 a month and sign up to increase it by Rs. 500 every year…just see how comfortable it would be to increase. If you are confident, increase by Rs. 1000 a year – your comfort level is necessary.

7. Start doing all this with a friend and open an account with www.myiris.com, or www.valueresearchonline.com, or www.moneycontrol.com or ….just start tracking your expenses and your wealth accumulation. TODAY, now.

8. See if you have some surplus from time to time – if the answer is yes, your SIP amount needs to be jumped up.

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  1. I am still dreaming of a day when a reputed fund house will offer a “Nifty 500 index fund” with close to ZERO charges…

  2. Dear Shinu, there is one from Goldman Sachs tracking the CNX 500 but it is not exactly cheap at an expense ratio around 1% for the direct plan

  3. Thanks Sid

    i was not impressed with it 1% charges which is way too much for an index fund. ideally this should be a blind pick for major insurance / for those who dosent want to learn about market / for those who dosent want to track their savings… but be nesured of an inflation beating returns in long period of time 10/20/30 years i believe… market will be the king giving the best and consitant returns…

  4. Yes shinu i was looking for a BMW at Rs. 7 lakhs…I do think Rs. 38L is way way too much :-).

    till the day somebody launches an index fund with less than 1% charges, it is the cheapest fund 🙂

  5. Subra sir,

    lol. Enjoyed your comment.

    frankly its not for me. somebody asked for a fund advice who has no knowledge of market and tracking. i only wanted to give him the simplest soln. but the above fund is not beating inflation nor is better than fd (nri) return. but would have beaten both if the charges were much less. hence my thoughts.. 🙂

  6. There are Index Funds in US which have expense ratio of less than 0.20%.

    I am surprised why is GS not able to offer similar expense ratios.
    One of the reason for this i think is due to less Assets under Management in India compared to US, even Mutual Funds have very high expense ratio in India.

    Also in India i have to pay brokerage charges to invest in ETF. While here in US i can buy many Index ETF’s free of Brokerage which have expense ratio of 0.1%!!

  7. Yes Ravi, that is exactly my point.

    An index fund which doesn’t need “any research” and minimal “management” should have ideally an expense ratio in the range of 0.10% only. Over that is loot. Mind you it is still big money too. Imagine the compounding effect of the same (difference of 0.90%) for a 30year period of a pension fund. 🙂

  8. HDFC Index Fund – Sensex (0.15 %); IDFC Nifty Fund- (0.22%) expense ratios…Direct Plans…Quite low isn’t it?

  9. Thanks Swapnil, they looks good indeed.

    Sensex to the best of my understanding is not a good index. Nifty 50 is much better but CNX 500 is best for it is almost 96% of the market, which is ideal for an index fund/ invest and forget it fund.

  10. Subrasir

    I am not a beginner but a student trying to learn. the index fund what I was researching was not for myself too (imagine a illiterate poor fellow who want to invest for his retirement after 20 years) as I am extremely happy with the actively managed funds. Appreciate your thoughts and nuggets of wisdom.

  11. Hello Shinu,

    Please refer a good balanced fund to beat the inflation plus some what safety for the retired people(in long term only..). This is my view..

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