The heart of a good investment plan is equity investment, begun early in life.
A lot of people ask me what is the right amount to invest in an SIP. The simplest answer to that is it should be AT LEAST 10% of your take home salary. If you are taking home Rs. 30,000 per month, then you absolutely must have an SIP investment of Rs. 3,000 per month to build long term savings.
The math behind this is not the point, at least initially. It is the habit of investing that is crucial. It helps to build awareness of two things that are absolutely crucial to understand.
First, you are on your own. There is no pension in old age, there is no medical care in India worth the name, and in today's world don't expect your children to take care of you. In matters of investment you must be steely eyed and realistic. Your parents are the worst guides in this matter because their world was very different. They had pensions, they had medical care, they had subsidized housing.
Second, what you get is NOT your salary. It is your salary, pension, house, medical, all rolled into one. You are effectively borrowing from the future, your own future, to finance your life today.
Take a minimum of 10%, put it aside because you will surely need it. If you cannot do that, life is going to get very tough very soon.
A lot of people ask me what is the right amount to invest in an SIP. The simplest answer to that is it should be AT LEAST 10% of your take home salary. If you are taking home Rs. 30,000 per month, then you absolutely must have an SIP investment of Rs. 3,000 per month to build long term savings.
The math behind this is not the point, at least initially. It is the habit of investing that is crucial. It helps to build awareness of two things that are absolutely crucial to understand.First, you are on your own. There is no pension in old age, there is no medical care in India worth the name, and in today's world don't expect your children to take care of you. In matters of investment you must be steely eyed and realistic. Your parents are the worst guides in this matter because their world was very different. They had pensions, they had medical care, they had subsidized housing.
Second, what you get is NOT your salary. It is your salary, pension, house, medical, all rolled into one. You are effectively borrowing from the future, your own future, to finance your life today.
Take a minimum of 10%, put it aside because you will surely need it. If you cannot do that, life is going to get very tough very soon.
