How do I make Rs. 10 Lakhs in 10 years?

You can generate Rs. 10 Lakhs by simply putting Rs. 5,000 per month in a debt fund for ten years. These are fairly predictable and stable return funds where your money will be at minimal risks. You could end up making Rs. 9 Lakhs or you could end up making Rs. 11 Lakhs based on what interest rates turn out to be in the future.

You can also generate Rs. 10 Lakhs by investing Rs. 3,500 per month in a custom designed mix of ELSS and other Mutual Funds. Returns here are not stable. You could end up with as little as Rs. 7.5 Lakhs, but importantly you could end up with as much as Rs. 18 Lakhs.

For a ten year horizon, it is better to invest in Equity Funds rather than debt funds. Write to us or call to set up the investment.

Want to Invest in the Stock Market?

Investing directly in stocks is one of the fastest ways to lose money. An individual investor is the worst informed, has the slowest IT systems, has the longest chain of brokers to market and has the highest costs. He has zero risk management and holds his losses, often growing them as he seeks to 'average' the price of his holdings. Everybody loves the retail investor, because ultimately, it is he who gives free money to all the other players in the market. No market is truly in a bubble until the retial investor is pumping in money freely and directly.

Fools invest directly in the stock market.

Smart guys invest through Equity Mutual Funds. These funds are tax free after a year of holding, can be used to provide 80C tax benefits, have provided historical returns of over 15% to 17% per year (some have provided more than 23% per year), and are fully liquid - you can put in more money or take out money at any time you want. Most importantly, you get an expert to manage your money.

Where should you invest money?

Suppose you have a Lakh to invest. Your choices are as follows:

1. A bank account will give you 4-5%, which translates to Rs. 104,000 in a year, Rs. 1.21 lakhs in 5 years and Rs. 1.48 lakhs in 10 years. These are guaranteed returns. You will not make any less or any more than this amount.

2. You can invest in National Savings Certificates (NSC). NSC have lock ins for five years at least, and will give you approximately 8.5% per year. Your money will grow to approximately Rs. 1.5 Lakhs in 5 years and Rs. 2.4 Lakhs in ten years. These are government guaranteed returns. You will not make any less or any more than this amount.

3. Debt Mutual Funds have zero lock ins, which means you can invest and withdrawe money at any time. They give about 8.5% per year, and their returns attract very low tax after three years of holding. Your money will grow to approximately Rs. 1.5 Lakhs in 5 years and Rs. 2.4 Lakhs in ten years. Returns are NOT guaranteed.

4. Equity Mutual funds have zero lock ins and very high volatility. In a SINGLE year Rs. 1 Lakh may grow to Rs. 3 Lakhs, or it may fall to Rs. 50,000. What actually happens only time will tell. This calculation is based on the historical performance of these products. On an average, however, Mutual Funds should give you 15% to 17%, the best will give you 23%. In ten years, your money should grow to Rs. 4 Lakhs (at 15% returns) upto Rs. 4.8 Lakhs at 17% returns. If markets do very well, and you make 23% returns, you would make close to Rs. 8 Lakhs. Quite a few funds have actually given such returns in the last 10 years. Returns are Tax free after a year of holding and returns are NOT guaranteed.

So:

For money you need within a year use Bank Accounts and FDs

For Money you need between 1 to 3 years use Debt Mutual Funds

For money you need more than 5 years in the future, use Equity Mutual funds.

What are the Sensex and the Nifty? How can I invest in them?

The Sensex is a number based on the average share price of a list of the 30 largest companies in India. To calculate it they took the prices of the top 30 companies in India, calculated an average, set that average at 100 in 1979 and are now measuring changes since that date.

Nifty is similar, but covers 50 companies and started at a different date.

You can invest in Sensex or Nifty through a variety of ways:

1. You can buy Index Futures.

2. You can buy an Index Exchange Traded Fund

3. You can buy an Index Mutual Fund

4. Or the best way - you can buy a Mutual Fund that uses the Sensex or Nifty as its benchmark.

A Mutual Fund that uses the Sensex or Nifty as its benchmark is the simplest, most effective way to invest in the India growth story. It is also the most important part of your personal financial plan because it is responsible for creating up to 90% of your personal wealth.

Write to us at SphereGreen.Investments@gmail.com to invest or to ask any questions regarding your personal investments in Mutual Funds.

Which are the best Tax Saving Mutual funds?

You can get a list of all the top tax savings Mutual Funds in India at ELSS -Value Research Online. There are a few things you should remember on ELSS Funds (as tax saving Mutual Funds are called).

1. They provide tax exemptions under section 80C up to a maximum of Rs. 1.5 Lakhs per year.

2. They have a three year lock in. You cannot take any money out.

3. They give way more than 9% returns. They should give you returns of 17% or more over a ten year period based on historical performance. In any given year, though, your returns could be anywhere from -50% to +200%.

4. Returns are not guaranteed

Interested in investing? Write to us at SphereGreen.Investments@gmail.com 

Who is responsible for your financial well being?

So what is your lifetime financial plan?

Write to us at SphereGreen.Investments@gmail.com and we can help you get started on investing for a secure future right away.