Mutual Funds wont make you MONEY! Be Careful

Now, those of you who read the title and thought you already knew this and hence you are right, you are wrong. Those of you who think the title is wrong, you are still wrong. So what is right then? You have come this far, so read on...  

 We were meeting one of our clients and they were really excited about getting their financial planning in place. With usual questions of what would happen to their money in case the Markets fall among others, the meeting went well. We thought we did a good job of enlightening this couple. Just then the bomb dropped- the bomb being a Question - 

 "What if I suddenly want to take my money out?" 

 All the enlightenment down the drain it went... 

 The first time investors, please note that in case you are investing in markets thinking that you will be rich overnight. Forget it, cos If you were that lucky, You would have been already married to Isha! But you are only as lucky as reading this blog ;) 

 Below is the checklist an Investor must go through before investing in stock Markets - 

  1. Make sure you have paid all your Luxury loans aka Personal loan, Mobile EMIs, Car EMIs, Blah blah, It's okay to have an outstanding home loan. 
  2. Make sure you have at least 18 months of fixed family expense as a liquid investment. An ideal situation would be having 24 months expense. 
  3. Make sure you have a Health Insurance equalling 12 to 15 months salary covering your entire family. 
  4. Only now should you start investing
  5. Now your investment should be at least spread over a period of 36 months. 
  6. This should be invested in Markets for another 60 months, In all 8 Years. 
  7. So from Day 1, you should at least stay in Markets for 8 years. Like Superstar Rajnikanth's rule of 8! 

So if you don't have this as your Plan A, then your Plan B of pulling out money from Markets in your "Emergency needs" will only mess things for you and Your Mutual Funds won't make you MONEY! Be careful. 

For financial planning and investment related queries, write to us at dropletadvisory@gmail.com or call us at 9962399924 / 9551373455.

Comments

Post a Comment

Popular posts from this blog

Why Investing is Easy - Chapter#1

Image
 We have been planning to write a piece with this title for sometime now. It so happened that last week I was speaking to a good friend from Investing community and he shared a experiance with me. He chanced upon a Doctor and learnt that there are from the same place. So the conversation boiled down to - "What puts food on the plate question". So One was a doctor and another was a full time investor/advisor. The Doctor was quick to point out that - Being Investor is such a easy profession unlike others, One can easily make 30-50% returns every year. My investor friend would only laugh since he knows that he is the not 1st and he will not be last to "think" that investing is Easy.  But of course, Investing is easy. Let me put the facts out here.. Lets say this is Jan 2019 and you started simply started SIP of 10K in a Mutual Fund that invests only in Top 100 stocks or lets say just did a one time purchase of about 1 lac. Here is how the results will look today -  In
Read more

The Small Cap Mania!

Image
 People are flocking to small cap funds like the zombies run towards humans in movies. We have seen this earlier and trust us, this is not gonna have a happy ending. Why so, because we are at the climax and you all know what happens to the zombies at the end of the movie, they all are trapped in one place and get finished off. So, why do I connect zombies with small cap fund investors now?                            Read on – Zombies don’t think – as you would have seen in the movies, all the zombies just run when they sense a living being. Similarly, the frenzy today is, all the investors are flocking towards small cap funds without giving a second thought, just because it has given good returns in the last few years . Zombies fall for the trap – Z’s don’t know what is about to happen next. They flock and fall for the trap laid out as expected. Humans are also the same, they run where the returns are higher and end up making worse mistakes. Enough of zombies, lets get to facts now
Read more

Interim Budget - 2024

Image
 We promised to bring you the Chapter#2 of the Why Investing is easy but in the interim, Government published the Interim Budget and I think its reasonable that our readers expect us to write about it and we write about it. So Chapter#2 can wait... Here's the News from the Interim Budget. “ If it ain't broke, don't fix it.” The Government has not done much mumbo-jumbo in the budget and there is hardly anything for middle class as such. Things look far better now than they were in the past and good thing is Government not trying to tinker things, that are working fine, just for the sake for some "Budget-drama".  Where does that leave us? If you have been reading our budget blogs , you will appreciate the fact that we always want to give a personal touch to what the take aways from the Budget!                                    Take Away# 1 Fix it if its Broken This is so much in contrary to what the Government has done with the Budget but gives a very important cu
Read more