Diwali buying: Why Goddess Lakshmi will approve of equities
Investing in ‘flavor of the season’ financial instruments, namely gold and silver is a considered a smart choice by some. So is the decision to invest in FDs and PPF. Our studies indicate that an investment of Rs 100 in trusted financial instruments for 30 years would grow 22 times.
Diwali, the most glamorous of all Indian festivals, is usually the time when goddess Lakshmi showers her blessings on her devotees in the form of an annual bonus. With a great bonus comes great responsibility -the responsibility of making a wise decision and to use the money efficiently. While the temptation to lavishing your family and friends with long awaited gifts is high during the festive season, it comes at the cost of failing to boost the corpus available for investment. So instead of spending on crackers to light up this Diwali, how about we make a decision to invest to light up Diwali in the next few decades for our families?
What are the options available?
There are several options available for making the most of this extra income. Holding on to cash for future use is one of them, but is a loss making initiative in the long run. Cash lying in lockers is guaranteed to lose value over time due to inflation.
Investing in ‘flavor of the season’ financial instruments, namely gold and silver is a considered a smart choice by some. So is the decision to invest in FDs and PPF. Our studies indicate that an investment of Rs. 100 in these trusted financial instruments for a period of say 30 years would grow 22 times. These returns are definitely better than keeping funds idle.
Is there not a better investment option?
But Diwali is not about just the sweets and sparkles. It is about creating a big bang and one of the best ways to create that impact in our investment portfolio is to add the flavor of equities. Equities have out-performed other investment asset classes, over the long-term, in India as well as globally. They protect your capital against inflation and provide you with a real rate of return. Equities in our investment portfolios are therefore essential to ensure a bumper Diwali!
Why Goddess Lakshmi would approve of equities?
Equities have an expected probability of delivering returns ahead of inflation, which is a key requisite for wealth creation. Equity performs much better compared to other investment options in the long run. We compared returns from investments in various financial instruments and the results are depicted in the chart below.
Rs. 100 invested in equities would grow 100 times for the same period of 30 years as compared to 22 times growth of investment in traditional financial instruments. The chart uses financial year end values for Sensex and year averages for Gold, Silver, PPF and FD rates. It ends on March 31, 2012 and the impact of taxes has not been considered. Equity has no long term capital gains tax. Except PPF, all other investments attract income or capital gains tax. This tax impact further lowers the return from other form of investments.
However, investing independently into equities over a long horizon requires tracking of performance and weeding out of underperforming scrip. If you are not up to regular monitoring of funds, then opting for equity mutual funds would be the best way to participate in equities. Equity mutual funds have outperformed the Nifty in 7 of the last 10 years. Designed to diversify investment portfolios, equity mutual funds are professionally managed thereby making financial planning easier, even for a novice.
To further simplify the investment process, you can register with reliable online platforms. These online platforms managed by team of personal finance experts, eliminate the need for investors to conduct their own research. They recommend scientifically selected mutual funds for investment thereby adding value to your investment portfolio.
With goddess Lakshmi bringing luck and buck this Diwali, make her annual trip special for your loved ones by investing in building their bright future.
What are the options available?
There are several options available for making the most of this extra income. Holding on to cash for future use is one of them, but is a loss making initiative in the long run. Cash lying in lockers is guaranteed to lose value over time due to inflation.
Investing in ‘flavor of the season’ financial instruments, namely gold and silver is a considered a smart choice by some. So is the decision to invest in FDs and PPF. Our studies indicate that an investment of Rs. 100 in these trusted financial instruments for a period of say 30 years would grow 22 times. These returns are definitely better than keeping funds idle.
Is there not a better investment option?
But Diwali is not about just the sweets and sparkles. It is about creating a big bang and one of the best ways to create that impact in our investment portfolio is to add the flavor of equities. Equities have out-performed other investment asset classes, over the long-term, in India as well as globally. They protect your capital against inflation and provide you with a real rate of return. Equities in our investment portfolios are therefore essential to ensure a bumper Diwali!
Why Goddess Lakshmi would approve of equities?
Equities have an expected probability of delivering returns ahead of inflation, which is a key requisite for wealth creation. Equity performs much better compared to other investment options in the long run. We compared returns from investments in various financial instruments and the results are depicted in the chart below.
Rs. 100 invested in equities would grow 100 times for the same period of 30 years as compared to 22 times growth of investment in traditional financial instruments. The chart uses financial year end values for Sensex and year averages for Gold, Silver, PPF and FD rates. It ends on March 31, 2012 and the impact of taxes has not been considered. Equity has no long term capital gains tax. Except PPF, all other investments attract income or capital gains tax. This tax impact further lowers the return from other form of investments.
However, investing independently into equities over a long horizon requires tracking of performance and weeding out of underperforming scrip. If you are not up to regular monitoring of funds, then opting for equity mutual funds would be the best way to participate in equities. Equity mutual funds have outperformed the Nifty in 7 of the last 10 years. Designed to diversify investment portfolios, equity mutual funds are professionally managed thereby making financial planning easier, even for a novice.
To further simplify the investment process, you can register with reliable online platforms. These online platforms managed by team of personal finance experts, eliminate the need for investors to conduct their own research. They recommend scientifically selected mutual funds for investment thereby adding value to your investment portfolio.
With goddess Lakshmi bringing luck and buck this Diwali, make her annual trip special for your loved ones by investing in building their bright future.
Moneycontrol.com
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