First Step towards your dream

In my earlier blogs, you would have understood the need of investments or saving, so that your finance is streamlined based on the type of spenders you are.

Today, I will give you a guideline that will help you to decide the type of investment; you can plan, so that your investment /savings grows with your age & career expands, as you near your dream / target that are achievable and becomes more realistic.

My understanding, further to this recommendation is that, you know the difference between debt & equities. If not, just get the basics on this by earlier blog on Equities & Debt investment type, before you read further down.

If you ask any financial expert, the best age to start your investments or savings is as early as possible.

Especially, in India, during the early 90's and 00's the average age to have a proper / regular job was at 31 and 28 years respectively, if you have completed your graduation in first class. Now, because of economic conditions and to improve profitability by global companies, they started outsourcing to large extend. Due to this job opportunities have increased especially in India and the average employable age has come down to 26 years [without depending parents for monthly expenses], where in the governments contributing majorly by policy changes and awareness creation, making us more educative & employable.

Saying this, I am just giving an idea, what will your time to start your investment and not starting a debate on the age or economic values. The labour force in India is still way behind China, however in one way, we are far ahead as per Deutsche Bank Research report. This report clearly suggests that, the potential is there in India and not elsewhere to be the workforce for the World, intellectually.

If we need to make India super power of tomorrow, then you as an Investor or Indian should start growing with your economic conditions. This means, when you participate in investing in Indian ideas that will guide or groom the World ex: Hotmail, Infosys, Reliance, Tata, United Breweries, Bharti and ICICI, then only these are achievable. I have listed the versatility in Indian industry, which have gone globally and succeeded.

A single tree can't become forest, however seeds from the tree, can become a forest in the later stage. If everybody starts investing in good ideas and good management companies, then we can do more than what others have done till date.

Typical Indian investment mindset is either Safe Investment or High Profit. When you want to succeed or your investment has to grow, you need to think of average safety and average profit, which makes you more reliable and avoids you from falling to traps or economic downsides, literally.

Income you earn by your work or employment is as active investment of yourself, which gives you a passive component called money. However if the same is idle or spend on unwanted things, then the purpose of your ability vanishes.

Make your passive component, work for you actively, without much hassle.

Any age to start investment is right. Don't get worried, since the other person has started early or he is earning higher at less age. All these are economic changes, so everyone is bound to rely on that and you need to understand it.

Typically diversify the investment into [recommending for an average Indian mindset]

Your Monthly Savings = [(Your Age + 20) % = Debt funds] + [Equities]

Scenario 1  Age: 25. Savings is Rs 30000 per month = [(25+20) %= Rs 13500] + 16500
Scenario 2  Age: 30 Savings is Rs 15000 per month = [(30+20) %= Rs 7500] + 7500
Scenario 3  Age: 35 Savings is 45000 per month = [(35+20) %= Rs 25000] + 20000

Debt returns varies from 3 % to 8 %.
Equity returns varies from -30% to +25%.

Sometimes the returns might be higher or lower due to various factors like type of investment, investment horizon, economic conditions etc...However I am trying to ensure that you keep only this average in mind, and follow the investment guidelines properly.

I have kept the average return of 15 to 20% achievable, keeping my basic investment formula and following this on regular basis.

• Saving & investing on MONTHLY basis ONLY
  
• NEVER investing in assets that have HIGH DEPRECIATION value at ONE GO.
  
  • Flat [not house], Car, Electronic items [TV, Mobile phones, Computers, Branded & Luxury items]
    
  • Equity Investment [might give good return, if the economy goes upside, however there is 'if' condition]
    
• ONE GO investments due to cultural barriers & personal needs, which cleans your savings or makes your to achieve your target
  
  • Gold, House, Flat for additional income [ investing due to rental factors]
    
• Investment Timeline – 1 to 5 years.
  
  • Every 1 year, you need to re-check your investment performance and change, if it does not work as expected.
    
• REDUCING YOUR EMI TENURE, where ever possible.
  
  • Typically, for Housing loan, an average person take 20 to 25 years. Instead take 10 or 15 years. Less Interest, your savings or earnings are converted into values or targets.
    
  • Typically for Personal loan, an average person takes 4 or 5 years. Instead take 2 or 3 years.
    
• Credit card purchases – Many try to convert to EMI. NEVER DO THAT.
  
• NEVER compare EQUITY returns Vs DEBT returns. Always sum both the returns, and calculate based on your principal invested.