Mutual Funds

 Active and passive investing represent two distinct approaches to managing investments, each with its own set of advantages and disadvantages: Active Investing: Advantages: Potential for Higher Returns: Active managers aim to outperform the market, so there's a chance for higher returns if successful. Flexibility: Managers can react to market conditions, economic trends, and company-specific events by adjusting their portfolios. Customization: Investors can tailor their portfolios to specific goals, risk tolerances, or ethical considerations more easily. Disadvantages: Higher Costs: Active management typically involves higher fees and expenses compared to passive funds. Potential for Underperformance: Many active managers fail to beat the market consistently over the long term, leading to lower returns than a passive strategy. Time and Effort: Requires continuous research, monitoring, and decision-making, which can be time-consuming and stressful. Passive Investing: Advantag...

 Insurance and Investment are different products. Insurance is taken against protection. It will protect us in unforeseen conditions. If something happens to the main earning member in the family, then insurance claim will protect that family. The returns are nominal. It is less than FD. The best way to take insurance is Term Insurance. With very less premium, the nominee of the policy holder will get huge amount in his absence. This will help the family to lead a normal life as usual without struggling for money.

PPF - Public Provident Fund. PPF allows you to invest for 15 years and cannot be withdrawn. It can be extended for every 5 years there after. The rate of interest at present is 7.1% per annum. Though it is useful to save tax under section 80C, it can only beat inflation. Wealth Generation is not possible through PPF. . Minimum 1 instalment of Rs.500 should be deposited per annum. Maximum limit to invest is Rs.1,50,000 per annum. After 7 years, we can withdraw our investments but a charge is levied on our withdrawal amount. By investing through SIP in ELSS (Equity Linked Savings Scheme), we can generate wealth exponentially over a period of time. The lock in period is just 3 years as compared to 15 years in PPF. After three years we can with draw the amount without any charges. SIP can be paused any time if required, till we decide to continue again. That will not cause any issue to the invested amount. There is no upper limit for our investments. Though there is a risk of market...

Starting SIP (Systematic Investment Plan) early offers several advantages: Compounding Benefits : SIP allows you to benefit from the power of compounding. When you start early, your investments have more time to grow exponentially because returns on your investments themselves earn returns over time. Longer Investment Horizon : Starting early gives you a longer time horizon, which means you can afford to take more risks and invest in assets with higher potential returns, such as equities. This can potentially lead to higher overall returns compared to starting later. Rupee Cost Averaging : SIP involves investing a fixed amount regularly, regardless of market conditions. This strategy allows you to buy more units when prices are low and fewer units when prices are high. Over time, this can result in a lower average cost per unit of investment. Discipline and Regular Savings : SIP instills financial discipline as it requires regular investing. Starting early helps inculcate a savings hab...

 The good time to start investment is the movement you have cash on hand. There is no good time better than that. Before investing one should think about the duration of how long to stay invested. It is not at all important when to start. We should only focus on our goals while investing. Please refer below the Nifty chart since its inception. Not only COVID,, but there are many obstacles in Nifty including Kargil war, Lehman Brothers Crisis , Government instability and so on. Every time there is an obstacle, Nifty corrected upto 40% or more. Inspite of all such corrections, still nifty managed to move from 1000 points in 1996 to 23500 points in 2024 with a CAGR of 18%. Every time there is a correction, Nifty managed to bounce back exponentially. No one predicted COVID, Kargil war, Lehman Brothers Issue or some other issues that we saw. Everything came and went. No one is discussing them today. We will see much more obstacles in coming days. None of us can predict them. Instead of ...

Below is the chart that shows how ₹1000 in each of these funds grew over a period of 20 years from 2003 to 2023. From the chart it was noticed that Small cap and Mid cap returns are more than Large cap. During corrections, large cap will correct upto 20%. Midcaps can fall from 30–40% and Small cap may lose the value from 40–60%. If we invest only in Small Caps by looking at past performance, we may get panic and try to withdraw the entire portfolio during corrections. Investment in large cap alone will not give desired returns. It is also advised to invest some portion in Debt funds also. This will help in generating emergency fund so that we can withdraw if required with out disturbing the equity part. So invest 40% in Large cap, 30% in Midcaps, 20% in small cap and 10% in debt funds for better returns.