Mutual Fund, Sahi Hai (Part-4/5)

First of all a very happy New Year to all of my readers... and wish you a successful journey toward financial freedom, May you achieve it soon.

Achieving financial freedom does not depend on your income, rather it depends on your spending, which means where your cash is flowing. Is it getting invested, saved, spent, or wasted?

A person whose income is Rs 50,000 per month can achieve financial freedom before a person who is earning Rs 2,00,000 per month. Sounds strange, but true!

Well Let's come to our next point of discussion-

Part 3 - Can you be self-disciplined to make investments?

As we all love to spend money and that's what for we earn money, and when it comes to saving or investment, it comes to the last priority.

We use this formula -

Earn - Spend = Invest

Rather, we must use this formula -

Earn - Invest = Spend

This means we need to have an investment budget as per our goals and thus it is the priority, and the same way all rich people do it.

Hope you have heard of recurring deposit accounts with banks or post offices and the logic behind the recurring was to get disciplined to invest consistently. This was such a beautiful system to create lump sum amounts and during my young age, my mother used it and got benefited from the RD account.

Still might be there such kinds of bank accounts available, not aware of it, but surely it's available in the stock market which is called SIP (Systematically Investment Plan). This is a very familiar term, these days.

There are many advantages of a disciplined investment plan, let me put a few-

1) Rupee Cost Averaging

Rupee cost averaging is a concept wherein you purchase a higher number of units when the NAV of the fund is low and a lesser number of units when the NAV is high.

2) Power of Compounding

Compounding happens when the returns on the investments you made start earning returns. With regular investments through SIPs, your returns can also be reinvested.

3) Flexible Investment

One of the key benefits of SIP is that you can choose to invest with just Rs 500 every month. This is an affordable way to invest monthly, without hurting your wallet.

4) Convenient Investment

Another advantage of SIP, once you choose a good fund, you can just give standing instructions to the bank and the monthly SIP will be deducted automatically

5) Disciplined Savings

On the one hand, this ensures that you develop a habit of saving money, on the other hand, you are better placed to make your money grow over time by staying invested to beat inflation.

6) Flexible Tenure

Some funds might need you to make a minimum investment of 6 SIP installments. However, there is no limit on how long you can continue making investments in a fund.

Hence, I always say... Mutual Fund, Sach me - Sahi Hai

That's all for now...

Best Regards

#IamVinodTiwari