Best investment plans in india

 What is investment? 

It is the process of saving money from your earnings for future plans and future use. People invest their money in different ways such as some investing the money in buying property, some investing in gold, some investing in fixed deposits and some investing in shares. For example if you want to buy a house after 20 years you should start investing a small portion of your earnings for that goal. 

What is SIP?

The full form of SIP is a ‘systematic investment plan’. It is also a type of investment in which we can invest money weekly, monthly and yearly. It can be done using a mutual fund. Now it can also be possible in shares. You can buy shares on a weekly and monthly basis. In SIP your money is automatically deducted from your account and invested in mutual funds or shares.

What is compounding? 

Compounding is a process of earning money from interest. The interest of money does not only come from the actual amount you invested but also from the interest of the previous year. For example let's suppose you invested Rs.1000 for 8% interest compounded annually. After 1 year your amount will become Rs.1080. but in the second year instead of 1160 it becomes 1166.4.

Power of compounding 

In the above example you may think that only a very little change is seen. But for a long period of time it is behind your thinking. The main role of changing your amount into a big wealth is time. With the help of a formula let's understand this concept. 

In the above formula you see that time is working as power. As the power increases that is time increases your money gets multiplied every time. For example, with a simple calculation I will show you how power works. 

If I take 5¹ = 5

But, if I take 5² = 25

Also, if I take 5³ = 125

You saw that in the above case as power increases the amount increases rapidly. Exactly the same happens in compounding. That's why most people suggest that you should invest your money for a long time because time increases your money faster.

Also read: Everything about Indian Stock Market

Different investment plan for you: 

i) 15 - 15 - 15 investment rule 

Here first 15 represents the principal amount of 15000 per month, second 15 represents the investment for 15 years and third 15 represents the rate of interest you get is 15%. If you do this systematic investment plan in any mutual fund or in shares you will definitely get a big amount of 1 crore.

ii) 15 - 30 - 15 investment rule 

Here the first 15 represents the principal amount of rs 15000 per month, second 20 represents the investment for 30 years and 3rd 15 represents the rate of interest you get 15%. If you do this systematic investment plan in any mutual fund or in shares you will definitely get 10 crore.

iii) Investment plan up to 1000 rupees 

If you invest 1000 rupees every month for 35 years at the rate of 15% compounded annually. After 35 years you will get more than 1 crore rupees.

But if you keep investing your Rs 1000 per month for 40 years at the rate of 15% compounded annually, you will be shocked to see that by increasing only 5 years in your investment, it becomes more than 2 crore rupees.

Conclusion 

All the above investment plans are not easy for a common man. It is seen that most investors start investing by assuming that he will invest for 30 years or 40 years. But according to the SEBI report, due to the fluctuation of the market most of the investors leave the mutual fund after 1 or 2 years. And almost 80 to 90% of the investors leave the mutual fund after 5 years. Only 5 to 10% of the investors remain in mutual funds for more than 10 years. And history says that only a long term investor can make money from the market.

Before investing in any share or mutual fund you should research at your own level.

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