Investment Thought

How many of you go with SIP(Systematic Investment Plans) for your investment ?

I guess it will not be more than 20%. Rest 80% will invest money in lump sum.
Both have their pros and cons but over long run with market showing huge volatility it's safer to be on SIP side.

Why we do the investments ?
Very basic(silly) question Right!!!

We do investment for our future career / retirements / dependent responsibilities / unseen problem we may face in future.
(For some it may be Girl Friend's expenditure).

In nutshell we do investments now to safeguard our future.
(Difficult to relate good future with girlfriend who is so expensive)

Then why do we go for investments only at the time of Financial Year end (Dec-Jan-Feb-Mar).
When our Company's Payroll Dept calls for our investment declaration proof we rush for investments, isn't it !!!
If this is the case with you, then how can this question be SILLY. So obviously all those 80% need to think on this more.

Disciplined Investment
As we get salaries every month we should stick to the same policy for our investments as well (future safeguards).
We should go for investments every month or atleast every quarters.
Discipline is required in every aspect of life, similarly it is also required (or more required) here.
Its not necessary to go for any one Mutual Fund's SIP plan, You can choose on your own terms every month or quarter.

It is very difficult to arrange Rs 1,00,000 at the end of the year than investing Rs 8,335 every month, Right.
Take the example of your PF amount. The PF amount deducted from your salary is also included in that 80C bracket.
Company is deducting some amount in the name of PF and you do not have any objections on this.
Then why should one bother if he himself stick to the same policy of deducting amount upto Rs 6667 /- on the same line.
(Assuming PF amount deduction to be Rs 20,000/- p.a.)
Remember Discipline, Discipline and Discipline.


Human Mentality
People says that we have to invest Rs 1 lacs to save tax under income tax act - Section 80C.
As government has given us the provision then why shouldn't we utilize it. Anyways we (Salaried peoples) are the only ones paying tax honestly.
(Courtesy to TDS by our company. 90+% very small businesses do not pay single penny tax as no TDS in their case)
I guess this figure may even rise.

Did you ever thought of why Govt of India has kept the provision of tax exemption?

This is to make sure that We (Citizens of India) do the investments at least for that Rs 1 lacs.
If this provision would not have been their OR say for example if that has been Rs 50,000 then we would have invested only Rs 50,000.
The limit is Rs 1 Lacs so we go for savings for exact Rs 1 Lacs.

Has any one thought of investing Rs 2 lacs and not thought of that the Tax Exemption is only applicable on Rs 1 lacs invested?
(Many of us even do not afford to go for investment upto 1 lacs p.a. due to some valid reasons)

Conclusion
1) We should think investment not to save tax under section 80C but as an instrument to safeguard our future.
2) Also everyone needs to be disciplined in investing money.
3) Do some research on where to invest as it won't take much time and even if it takes its worth as you will be gaining some knowledge from it.


Here I conclude the first lesson on Warm-up session on Investments
From next lesson onwards we will be going through examples on how and where to invest.