We Design Your Financial Destiny

(Precious) Words of Wisdom : "If stock market experts were so expert, they would be buying stock, not selling advice." ~ Norman Ralph Augustine

Unfixed Deposits + Untraded Equity = Unlimited Riches

Many people get their investment strategy totally topsy-turvy.

They act long-term for their fixed-income investments AND short-term for their equity investments.

Hence, PPF, fixed deposits, insurance etc. are chosen for long-term goals. While, day-in and day-out their eyes are focussed on the stock-market tickers, with mouse ready to click on the trading websites.

Ideally, it should be the opposite:

Equity investments should be Buy-and-Hold (preferably) forever. And, fixed deposits etc. should be flexible to take care of the daily needs.

It's pretty simple to get the investment strategy straight and correct. All you need to do is to
- unfix your deposits and
- untrade your shares

How? Let's explore:

A. Unfix your deposits

Keep these 10 key issues in the mind, when deciding on your fixed-income investments.

One. Junk all insurance policies. Not only do they lock-in your money for decades. But also give extremely poor returns.

Two. Except PPF and EPF (where you get multiple tax benefits), junk all the long term deposits, bonds, debentures, etc.

Three. Except for a small amount as an emergency corpus, junk all bank fixed deposits too.

Four. The smartest move is to move your complete fixed-income portfolio to debt mutual funds.

Five. Compared to fixed deposits, bonds, debentures etc., you pay much less tax on debt mutual funds (when the holding period is more than 3 years).

Six. There’s no Tax Deduction at Source on debt mutual funds. Whereas, all of us have experienced multiple troubles with regards to TDS on bank and other interest income.

Seven. Because debt mutual funds have a diversified portfolio of investments, they are much safer; especially when compared to the Company Fixed Deposits and Debentures.

Is this how you are building your portfolio of investments?

Eight. Most debt mutual funds do not have any maturity date (except a few close-ended funds). Hence, you can redeem them any day you want your money. 

On the other hand, insurance, fixed deposits, bonds, debentures etc. mature on a given date (except a few traded on the exchange, but mostly with limited volumes).

Nine. On premature withdrawal (if permitted), fixed deposits etc. pay lower rate of interest.

Whereas debt mutual funds are redeemed at the market NAV — without any loss on the returns accumulated till date.

Ten. Besides, insurance policies levy heavy surrender charges and premature closure of FDs also may attract a penalty. 

Whereas debt mutual funds do not penalize you for early withdrawal (except maybe for some initial period when there is an exit load; but thereafter nothing at all).

Do this and you make your fixed-income investments lot more flexible (and also much safer and much more tax-friendly.)

B. Untrade your stocks

Keep these 10 key facts in the mind, when deciding on your equity investments.

One. Let’s face the fact that most of us do not have sufficient knowledge and expertise to buy and sell stocks.

Two. Let’s face the fact that most of us do not have sufficient money to build a diversified and balanced portfolio of stocks.

Three. Let’s face the fact that most of us do not have sufficient time to regularly monitor our portfolio.

Four. Let’s face the fact that most of us do not have sufficient mental aptitude to handle the steep ups and downs of the stock market.

Five. Let’s face the fact that most of us would be far better off taking the help of an expert in this regards. Hence equity mutual funds make ample sense for most lay investors.

Six. Let’s face the fact that professional management, extensive research, day-to-day monitoring and diversification possible with equity mutual funds, cannot be replicated by an individual investor. 

Seven. Let’s face the fact that trying to make money on the stock markets in real (or quick) time is as good (or bad) as gambling. The risk of losing, even the entire capital, is quite (quite) high. 

Eight. Let’s face the fact that as the investment time-frame increases, the risk of loss from equity investment reduces. Beyond 10-12 years, there are almost zero chances of losing money in stocks.

Nine. Let’s face the fact that TIME in the stock market is more important… because even God cannot "time" the markets.

Ten. Let’s face the fact that, instead of big lump sum investments, small, regular and disciplined investing — also known as Systematic Investment Plan or SIP — is the best way to approach the equity markets.

Do this and you make your equity investments deliver MAXIMUM RETURNS with MINIMUM RISK.

So what are you waiting for?

Chalo! (If you wish to become rich) put your investments in the right order.

An Investment In Knowledge Pays The Best Interest ~ Benjamin Franklin

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