Money Plants

Monday, January 16, 2006

S-I-P

So you say you don't have enough to save? Can you spare 2000 bucks a month? Ok...1000? If you can, you're on your way to financial freedom. If you can't, you are doomed in any case.

Don't tell me 1000 bucks a month will get you nowhere in investing. Believe me, that's all you need to build your retirement corpus. What can you do with 1000 bucks?
1) Listen to your dad - open a bank recurring deposit. Link it with your savings account and transfer the money there.You can expect to earn 4.5% every year.
2) Get savvy - invest in mutual funds. Expect around 15% over a long term
3) If you know the stock markets - invest in equity stocks. Expect around 15% over a long term
4) Play it safe - invest in a PPF account. Gets you 8% every year.

And what do you do next? Fill it-shut it-forget it. Don't touch that money for at least 10 years. Do I hear you say 'whoa - 10 years is too much, what if I need the money?'. If you weren't investing, you would have been spending. So locking it in for 10 years won't matter, would it?

And if you want the carrot..here's what you get if you stay invested for 10 years (based on historical performance of course, which is most likely to continue into the next 10 years, unless politics or nature or both screw up)
1) Bank RD - 1.52 lakh
2) Mutual funds - 2.78 lakh
3) Equities - 2.78 lakh if you've done a good job of fund management
4) PPF - 1.84 lakh

And if you have 30 years to retire, here is what you will have when you retire
1) Bank RD - 7.65 lakh
2) Mutual funds - 60 lakh
3) Equities - 60 lakh if you've done a good job of fund management
4) PPF - 14.68 lakh

If you're convinced, get going. If you aren't, I will have to do some more convincing. Of course, later.

9 Comments:

  • Brilliant Idea, Money Gardener!! I mean it, it's fabulous!! I hope it works out! :)

    By Blogger Anupama Viswanathan, at 4:28 AM  

  • really? the PPF thing sounds tempting, got to give it to u. but the Mutual fund ad's people read that risk factor so fast, i get scared just watching them, leave alone investing!

    By Blogger S m i t h a, at 6:12 AM  

  • Was just thinking of Mutual funds in the past few days but I guess the term "risk" just puts me way off.

    By Blogger Sunita, at 8:13 PM  

  • S.I.P is a very good option if u dont hav time to check share markets closely. Even I am suggesting few of my friends here to go for SIP, especialy girls who are under 25. Coz they r working and hav money to invest also.

    By Blogger REFLEX, at 9:28 PM  

  • Nice blog, thanks for the tips. Came here via Arun's LJ.

    By Blogger Madhav, at 11:34 PM  

  • Thanks smitha and sunita. Have put up a blog on risky mutual fund investments.

    Glad to know you agree on the SIP, reflex.

    Thanks chaakyar.

    By Blogger Money Gardener, at 1:15 AM  

  • Hey,

    nice topic to choose.

    Shall keep visiting..

    By Blogger Girish, at 10:44 AM  

  • Thanks Girish. Hope I keep updating as well :-)

    By Blogger Money Gardener, at 9:53 PM  

  • Wonderful and informative web site. I used information from that site its great. »

    By Anonymous Anonymous, at 12:33 PM  

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