Reading the book Money Master The Game.
One key point to take from this book;
“Knowledge is potential power. But only execution will lead to mastery”.
Money will come and go but time will only go it never comes back.
Find your passion and spend enough time to be master in it. Spend quality time with your own people. And finally let’s plan for the financial freedom.
Let’s use the time to make your financial life secure.
In any country we need to pay taxes which can not be avoided. But with that said, every country has some or the other investment options which gives your tax rebates.
In India, I see few tools which give tax free returns. There are many such plans by Government of India. But I will consider two of them which is a sure shot return after the maturity.
PPF (Public Provident Fund) and SSY (Sukanya Samriddhi Yojana)
I have started PPF before two years.
And I am missing on SSY till now. Planning to start asap. But SSY can not be pledged to get a loan. So planning to start with a moderate investment because I don’t want to regret later for not opening the account. SSY will help me in future if I would like to give some money to my daughter periodically.
Why am I considering these two platforms for saving my money?
- I am putting my money with Government of India. They use it for the growth of the nation and I contribute indirectly.
- I get security as Government is reliable.
- I get tax benefit on the amount I contribute.
- On the interest there is no tax. Interest is tax free.
- On maturity I get the full amount back with interest and with no tax.
- On PPF I can get loan when ever I need. But SSY does not give this facility.
These investments will never loose the principle amount. So its risk free. I won’t say risk free but less risk.
Now comes Stocks in Stock Market and Mutual Fund.
This is risk. Does not guarantee that you will get your investment back. I mean, let us say you are investing 1 lakh rupees today which is your savings from long time from SIPs. your average buy price was let us say 50 any currency. And due to some unforeseen situation you need any amount of money which can be used to face the financial requirement. You need money from all sources that you have. And at that moment if the average price is below 50 then what? Either you have to loose on principle and withdraw or have to go for a loan on that investment by pledging it. What is the guarantee that again the need will not arise and what is the guarantee that you can live with a peace of mind if you loose on principle. You may close it any time. That’s a risk on your hard earned money. leave about the interest that you could have earned if you put the amount in bank, you are loosing on the principle.
This happened to me. I never controlled myself when the investment went down. By incurring losses I withdrew all my stocks and sold them.
in stock market ups and downs are always there. When you need money if the market is at down trend you will definitely loose on your investment.
People say why not put it in SIPs to average the risk. But I tried that too. When the market was going down, I never invested and when it came up I invested. Finally I made loss because at the end when I needed money, the market was down. If you have patience and really know you don’t need that money, then go for SIPs.
Forget about day trading and speculation, that is for big players who already sustained in the market and have a circle who can tell them which stock is moving in a direction in that trading session.