Category Archives: Financial Freedom

SIP:A way to financial freedom

A majority of people are unable to fulfil their financial dreams and goals. This is not always due to their low income level but mostly it happens due to the unawareness of the instruments which can help them in achieving their goals.

Mutual funds are such an instrument by which we can not only achieve our financial goals but also grow our money faster than the inflation rate. There are several ways to invest in mutual funds but SIP is one of the most effective way.

SIP means Systematic Investment Plan. If you want to invest in mutual funds and you choose this option to invest, you’ll get these benefits:

I.Periodic investment-You have to decide an amount to invest every month through SIP. One can decide any amount but at least 10% of your income will be the right amount to use for investment. It helps you to build a corpus gradually whether to achieve your goal or to invest again.

II.Averaging-This is another benefit from SIP. If you invest all the amount at once, you can’t get the benefits of averaging which helps you to maximize your profit even in odd conditions.

Let me explain this through an example: Suppose you invested $10000 in a mutual fund through SIP at the price $10 per unit. After investment the unit price falls to $5 per unit. If you again invest $10000 at this price. Your average price will be $7.5. Again, your average price will decrease as you continue to invest more at a regular interval at lower prices. This process is called averaging.

I think it’s clear to you that the concept of averaging helps us to decrease our loss and grow our profit.

Benefits of investing into stock market

Stock market is heaven for those people who wish to start a parallel income with their regular income. It’s also a boon for those who wish to grow their savings at a faster rate. Even then only about 1.5% of Indian people invest into stocks. However, about 10% people in China and 18% people in USA  invests in stocks.

I feel that Indian people don’t invest in stocks because they lack knowledge about it and so they fear from it. Let’s have a look over the reasons to invest into stocks-

[1] Richdom or financial freedom- Each person in the world  wants to get richer. But, only a few are able to do so. Stock market is one of the most effective way to get richer. Try to know about Warren Buffet or Rakesh Jhunjhunwala if you have any doubt. Numerous people have changed their financial status by the help of the investment in stocks. You too can be one of them.
Mr Rakesh Jhunjhunwala started to invest into the stock market in India with only Rs 5000/-. Now his networth is more than 5000 crores. Mr W Buffet is one of the richest persons of the world.

[2] Less working hour –If we want to become a stock investor, 1 hour every day is not bad to study or analyze the stocks. It means that you can earn money from the stock market with your current job. What about this extra income? No other source of income can beat this time requirement. 

[3] A home based income- One doesn’t need to go here and there to get income from the stock market. You can do everything of it by the help of a laptop or mobile with an internet connection. You can do all the tasks related to stock market from wherever you are from your home or your office. 

[4] Sufficient time for family-while doing jobs, we are generally not able to spend sufficient time to enjoy life with our family. As an stock market investor, you get sufficient time to spend with your family. You can go on tour for three months or even more with your family and also you can manage your portfolio of stocks from anywhere in the world in this age of internet.
[5] Better returns-Stock market returns are generally higher than any other instruments for investment like mutual funds, real estates, fixed deposits etc. You can get more than 200% in two or three years, if you have invested in the right stocks. No other investment gives such huge returns.
[6] Easy &  anytime withdrawal –This is also a great benefit of investing in the stock market. You can get your money out anytime from your stocks if you need money. Instruments like real estates can’t give you this opportunity.
[7]Beating Inflation Rate-Have a look over the table-
Year       Inflation Rate

2015.            5.88%

2014.            6.37%

2013.            10.92%

2012.             9.39%

 This table shows the inflation rate in India from 2012 to 2015.We can see that the inflation rate is between 5% to 11%. So, we need an instrument that may give us more that 11% return to fight with inflation rate.Banks and post office can never give 11% or more on any investment options. Stock market fulfills our need.

So, it’s a wise decision to invest in stocks.

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