How to double your money and create wealth for your retirement by investing

Published by Finkwik Team on

How to create wealth and plan your future.

Time is money. The time value of money cannot be denied if you want to create wealth for the future. Here we talk about mutual funds. Starting off with share markets take time to learn the basics. Before becoming confident about it, one cannot invest and lose money. This is where mutual funds excel. In this article, we will discuss about investing with very little amount of money, without much knowledge of investment jargons.

Create wealth: For a starter, mutual funds are the best choice. The fund manager takes care of the invested money. It grows even when you’re sleeping. But remember, it’s also subject to market ups and downs hence involves little risk. Nothing happens without risk.

There are two kinds of mutual funds in terms of investing method – direct and indirect funds.

Indirect mutual funds: There’s a price you pay on every payment that is paid to brokers. It will not be shown directly, but you’ll be paying a hidden percentage as brokerage.

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Direct mutual funds: No hidden charges. The extra money will directly be added to your mutual fund investment.

Which one you should choose?

It’s always up to your logic, but practically, there’s a difference. Your brokers may not tell you this! In the long run, a small amount deducted as brokerage (having the potential to generate money) is actually reducing a hefty amount of price as the fee for a longer period. This means you’re giving away the opportunity to earn your money to someone else. You may consider it small, but for a long term investor, it means a lot.

If a person having 5 lakhs investment in mutual fund having 10 percent returns annually for 30 years would earn approx one crore in direct plan. Instead, if he chooses the indirect plan with 1 percent commission with the same scheme, his returns would be approx 74 lakhs. That’s a huge money!

Investment advisors will not recommend right plan for you. They’ll work on their interests or recommend regular mutual fund schemes. No one would give you something for “FREE”. There is a hidden price you pay for him in your investment plan. A person who charges for consultation would only work for your true interest. Direct plans allow to generate little more without costing more money.

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How to invest in mutual funds?

Decide between SIP and Lumpsum Investment: If you have more savings, and bank interest does not satisfy you, then the investment of Lumpsum amount may be better for you. If you want to create wealth for the future with little savings every month, start with SIP.

Benchmark: Before you take investment decision, you need to be an informed investor. There are many online sources where you can find benchmarks for each mutual fund. Not every fund suit to your need. So make a careful study of some popular plans.

Invest in a single plan or multiple plans: “Don’t put all eggs in a single bucket” says Warren Buffet. If you don’t know who’s he, you’re wasting your time here.

Make your decision: Decide upon whether to invest in one plan or multiple plans. If you’re investing in portfolio of plans, set a trade off between Small, Mid and Large cap funds or other kinds of funds based on your position to take risks and your expectations.

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Invest: It’s the time to take your action. Find ways to invest either online services or offline modes through brokers.

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Disclaimer: Though mutual funds a safer choice, they too contain some risk factors. Your investment and returns may vary based on market response. We do not advice you to invest in any particular mutual fund and it’s up to your own discretion.


Finkwik Team

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