The power of small

Home economics is no stranger to ‘The power of small’. Yup momeys, I am referring to the small savings we manage every now & then.

We have all had situations where a little fortune out of our savings kept aside bailed us out of unforeseen situations. A medical emergency, unexpected wedding or birthday shopping, unplanned purchases for home or self, numerous ocassions can pop up when small sum plays a big role.

This post is to draw attention to a fast gaining investment feature called SIP – Systematic Investment Plan.

Understanding SIP

SIP or ‘the good EMI’ as it has been fondly called is a sure shot way to make your small savings grow. To give some background, SIP is a feature offered to MF investors. Mutual Fund is a collective pool of money in which various investors put their money for returns. This pool is managed by experts who in turn invest it further to fetch gains for their investors. Now to invest in a mutual, there are 2 ways – lumpsum which you can do one time and second is SIP.

SIP is any fixed amount (starting Rs. 500) that can be invested every month on a set date into a mutual fund scheme of your choice.

Why SIP

Now comes the real part. SIP is increasingly being used by investors because of 2 main reasons:

1. Flexibility to invest small sums over a period of time.

2. Great returns due to the power of compounding.

Compounding Advantage


An investment has to be given time to give worthwhile returns. And when you invest through SIP, you turn little sum into big money. As you invest month on month, your base increases – sum you are investing plus the returns keep getting added. This is how you benefit from compounding. To explain better, suppose you put Rs. 2000 every month in SIP for 10 years. The principal you have put is Rs. 2,40,000. With a modest rate of return of 12.5%, you will have Rs. 4,78,763 at the end of 10 years. You can use this calculator to find out more: https://www.mysiponline.com/sip-calculator.php

This supersedes any Recurring deposit returns you will make over long term. Mutual Funds are seeing unprecedented interest from new investors and SIP is becoming a favourite. But you don’t have to follow anyone for the heck of it. You can do an SIP for the sheer benefit it brings. Just resolve to make small savings into big as a first step and rest will fall in place. Start today!

Have you planned for your child’s future?

Diwali storms up the social whirlwig; food, dress up and meet up is all on cards. The usual worry of how to keep the kids gainfully occupied is thankfully averted during such catch ups. They find playmates and enjoy their time, which for us parents is a huge load off.

 This diwali, we too had some great fun socializing. A new parent couple among our friends got talking about how responsibilities are keeping them engaged. Life has been very different after their child’s birth and one responsibility they can’t get a handle on is money planning. More discussions among the group led to finding out that it is a rather widespread question, parents are grappling to figure. It obviously became imperative that a blog post covers the topic of planning our children’s future.

Before setting out on a task, we have to understand what is it going to achieve. So parents unanimously voted Education and Marriage as goals to work for. Both are gargantuan expenses and require disciplined action. Depending on your age, children’s age, your risk profile, choice of education field and costs involved you will have to ascertain a sum required after a said amount of time. We are mentioning the tools you can use for investing. 

SIP

When you keep a horizon as long as your child’s growing up years, SIPs in small to mid cap funds and balanced funds are your best bet. They let your money gain with the benefit of compounding year on year. For those with some risk appetite, consider funds which invest a considerable part in equities of growing companies. Balance funds are slightly less risky because they have equity and debt (such as term deposits, bonds) instruments both.

For the uninitiated, SIP is Systematic Investment Plan better known as ‘the good EMI’. You invest every month a fixed sum as small as Rs. 500 into a mutual fund. The fund is managed by a team of experts and they in turn invest in various instruments to generate returns. We have more posts on MFs coming momeys 😄


Sukanya Samriddhi Yojana
This has to be our favorite for those who have daughters. The scheme encourages parents to build a fund for the future education and marriage expenses for their female child. The scheme currently provides an interest rate of 8.3% p.a. (new rates are likely to be announced). It allows deposit upto Rs. 1.5 lacs in the name of your daughter every year and it matures when she reaches 21 years of age. You can either choose monthly or yearly contributions. Momeys should absolutely consider monthly contribution!

Insurance

Well it’s not our favorite, but we have to bring it into discussion to give you our reasons. If you search online for children investment options, you will find a gazillion ads by Insurance companies luring you with child plans. What should you do? Well our advice would be to ignore. They are mostly selling ULIPs to you which are far inferior in returns to mutual funds and charge expensive premiums. You might as well directly invest in MFs through SIP.

However, we have to add that you must take insurance, as life cover to safeguard your family and children in an unlikely event.

Gold ETFs

Gold ETFs are exchange traded funds that passively track the performance of Gold Bullion. These funds buy gold with investor’s money (on the behalf of investors) and convert it into units. 

Gold Exchange Traded Funds can also be an option if you want to invest for using them during marriage. These are traded on stock markets and are a great alternative to physical gold.

With children, you wouldn’t want to take a chance. So invest today for their tomorrow.

​Your checklist to becoming an W-investor

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Hola Momies! First up we have to lay it out..

An W-investor is a combo of:

  1. Woman investor
  2. Winning investor

If you are new to investing, then we have a fun checklist here for you to find out if you have the makings of becoming an W-investor. Read on,

     ●  You make a budget every month for                      expenses: if yes then you have a discipline            to identify your cash flow. You can surely             graduate to Goal-setting for your family               and tread on the path of Financial Planning        – a must for becoming an W-investor.

 

  • You have a kitchen garden: or some home plants. When you nurture plants, you learn to have patience because there are no quick spurts, fruition takes time. This is true for investing also. A sense of time horizon is key for an W-investor – you get returns over time.
  • You compare prices in supermarket: you are either the kind who compares or you are not; there can’t be a mid way. There’s good news in store if you compare because same buying behavior will also apply to financial products and instruments. Say while purchasing Insurance you have to compare premiums or while opening an FD you have to compare rates offered by banks.
  • You like experimenting different things for family: Despite knowing your choices clearly, you like to dabble with different cuisines for family, signing up for new apps, exploring news brands in groceries.. You feel calculated risks are important to experience a variety of things.  You have thw truest grain of an W-investor because investing comes with some amount of risk for sure. And no risk is no gain.
  • Even if small, you save a sum every month: Be a proud mom for being able to save because most people are not. There are various instruments which can work with small amounts but when consistently done, can payback well. Own the badge of W-investor guilt free because your SIP may just be the smartest investment around.