We are not saying that stock market is a bad place to invest. Just that it is not for everyone and not every day is a good day to invest. Let’s not get carried away with the rally and feel left out. There are other ways of making money and they are safer. Caterpillar will help you identify those and consider your goals are a priority.
When I was a kid, my mother was my tutor. She would often ask me about the chapters I find tricky. Let’s start with that chapter only, she would insist.
I hated it back then, I still hate it today. But over years, that approach became my habit. It helped.
When we do not know where is the life headed, retirement planning for obvious reasons drop to the bottom of our to-do list. But, my learning says, it should be on top of the to-do list. Once you plan your retirement properly, other short and medium term goals fall into place.
We often say: “Abhi toh bohot time pada hai, baad mein aaram se kar lenge.”
But time flies and tomorrow never comes.
Let’s assume that you are 30, married, and living in a metropolitan city. Suppose further that your monthly expenses are Rs. 60,000 per a month and you see yourself retiring at 55, and die by 85. Here’s the money you need to accumulate if you were to live the lifestyle you are envisaging for you in the silver days:
At an inflation rate of 5% per annum, your Rs 60,000 monthly expenses today would be Rs 2,08,000 by your retirement. To earn that inflation adjusted Rs 2,08,000 per month expenses, you need a corpus of Rs 7.75 crore.
To reach a corpus, you need to invest. Suppose you are getting 12 per annum return, which is huge given the prevailing fixed deposit rates. This is what you would be needing to invest monthly today:
After 5 years
Rs. 78, 350
After 10 years
Rs. 1,55, 130
After 15 years
Let’s talk about reducing your monthly expense (no pun intended)
(Numbers have been rounded off for ease of understanding)
As you see, it is necessary to start planning retirement as early as possible because compounding is a process and there is no catalyst to speed it up.
No to forget are unforeseen events such as pandemics and slowdown in the economy, for which some savings are a must.
Moral of the story- Delaying for later or next month or next year is a disaster waiting to happen. Pick your phone and call on 817-827-1045 to get started. We are here to provide help and guide you every step of the way.
The Sensex and Nifty, and even Midcap and Smallcap indices have been hitting fresh highs. You track your portfolio. You are elated with huge gains. Bech dun kya? You wonder to yourself.
There is nothing wrong in booking profits if you see attractive gains in your portfolio. But, this is not an ideal approach. We at CIIS encourage you to have an ‘exit’ strategy first before you park your money with us. You don’t redeem your investments just because everyone else is doing so. Or, because you expect market correction in the coming months. Markets cannot move in one direction. It’s a cycle. It’ll go up and up and down and down. You cannot time it. What you can time, however, is your exit strategy. We tell you all about it.
How to get your exit strategy right?
Buying a stock or a mutual fund is not as difficult as deciding when to sell it. However, if you approach investments in a disciplined manner, it becomes a cakewalk. Are you aware of the most basic principle of investing? If not, then you are not alone. In fact, people who know it also ignore it. Today is your chance to learn and make the most of it. This basic principle is what defines your exit strategy. Curious? Of course, you are!
I am sure you must have heard of goal-based investing. Do you do it? Tell us in comments.
Linking a goal with your investments is the basic principle of investing. You can’t just start an SIP of Rs 5000 every month for eternity. You must have a goal in mind. This could be your imminent wedding, child’s higher education or wedding, a vacation abroad or your retirement. If you have a goal in mind, we can help you estimate exactly how much funds you need to collect to secure your goal.
We will tell you how much monthly outgo is needed. Once we have settled that, rest assured, you will meet your goal in the timeline we have set for it.
What if the stock market performs much better than what we had expected? You’ll meet your goal sooner. If you have collected the required corpus already, you exit. As simple as that. If you have not, you don’t. The markets must be staring at a correction, but your goal is still years away. Market correction shouldn’t bother you. Assume markets do correct. It will be an opportunity to buy more stocks or units at cheaper rates. When the tide turns again you will be much richer closer to your goal.
If your goal is just a year away and you are in the middle of a bull market – as we are now – you consult your advisor. You may want to exit from equities and move your funds to a safer debt mutual fund. Your exit strategy should always revolve around your goals.
Follow the basic principle of investing. Every single investment that you have done or will do should be linked with a goal. Define your exit strategy by having a clear estimation of future value of your goals. Once you get it right, the highs and lows in the market shouldn’t bother you. Collecting the future value of your life goals is your aim (and our promise). We strive towards it. We befriend market moves to achieve it.
Call us (+91-8178271045) to know more about exit strategies. We at CIIS are happy to help.
You have a lumpsum amount to invest for the short-term, but you are not really sure which instrument to choose. The returns on FDs are too low. PPF is giving slightly higher returns but the lock-in period dissuades you. Need not worry!
There is an investment product that may fetch you double the FD and PPF returns in the short-term. This is P2P lending. All you have to do is sign up on a P2P lending platform which will connect you with a spate of borrowers. You may lend your money to a set of borrowers and earn interest on the same.
This article will cover the returns aspect of P2P pending. Read the following article to get a detailed understanding of what P2P lending is:
Attention millenials! Learn all about peer-to-peer lending
When you register with a P2P lending platform, you will find lakhs of individual or MSME borrowers. Some will have higher credit score while others on the lower side. High-credit-score borrowers get loan at a lower interest rate compared to those with lower credit score. The interest rate may range between 12-36 per cent on an average.
You may lend all your money to a single high-credit-score borrower or among a set of such borrowers. You may mix and match different categories of borrowers. Divide the lending amount among various risk profiles. This will give you better returns.
P2P lending platforms give you two options to build your lending portfolio. Either you can select the borrowers on your own or you allow the system to generate a customised portfolio for you. While the platform does provide you detailed profiles of borrowers, analysing them all could be cumbersome. So far as system is concerned, it allows you to put up return expectations and accordingly build a diversified portfolio for you.
For example, if you wish to earn 13-14 per cent, it will pick up moderate risk profiles. However, if return expectations are more than 20 per cent, the borrowers’ profile will turn riskier. One may choose the return expectations as per one’s risk appetite.
Difference between RoI and net returns
You do not earn the full interest rate on which the borrower is lent the money. The P2P platforms charge nearly 2 per cent commission on the same. RoI is overall return that your investment generates, while net returns are calculated after subtracting the platform charges. You may need to check with respective platforms if the portfolio return visible in your account is RoI or net return. What you should focus on is net returns – not RoI.
Wondering what if the borrowers do not return money? Default risk indeed exists. This is why a well-diversified portfolio among various risk profiles is advisable. If you have Rs 1 lakh to lend, instead of lending 20,000 to five borrowers, you should lend Rs 2000 to 50 borrowers. Even if 4-5 borrowers do not return your money, you may still earn nearly 9-10 per cent net returns. The more money you will have, the wider could be your diversification. The crux lies in customising your portfolio. This is where our role comes. On no extra charge, we help you with creating a diversified portfolio. Give us a call to know more about the product @ 8178271045