Podcast Notes: 10 – How and Why to Save Money and an Intro to Mutual Funds and SIPs

Guest: Akash Jain – He has been in the field of equity research and mutual investments for 8+ years.

This session is especially for teens or people in the age group 16-20, who wish to save money but have difficulties in doing so.

 

 

Listen to the podcast here: https://anchor.fm/chirag-barjatya/episodes/Podcast-on-How-and-Why-to-Save-Money–Mutual-Funds-and-SIPs-e6a76l

 

  • How to save money?
    • fix a percentage that you are going to save and then only spend the rest as we tend to spend more money when we don’t create any restrictions.
    • Always be curious and try to get better at managing money. Remember like money, knowledge compounds as well.
    • Be around people who are smart with their finances rather than those who are indisciplined with money.

     

     Why should one save money?

    • It compounds. (1.01)365= 37.78, (0.99)365 = 0.025
    • Financial Independence – you get to choose the project you want to work for, people you want to work with and there’s always the option of retiring early

     

    • Security – while nothing is ever secure, a rainy day fund gives you good buffer to withstand any shock. one less thing to worry about

     

     

    SIPs :

    • SIP is systematic investment plan.
    • It is an investment option offered by mutual funds to invest small (regular) amounts of money instead of lump sums(at one go).
    • The frequency of investment is usually weekly, monthly or quarterly.
    • Every time a sum is invested, more units are added to the investors account.
    • You get more units when markets are up and less when they go down, so return averages out over a period of time. So you don’t have to worry about falling and rising markets
    • SIPs are flexible; the investor may stop investing a plan anytime or may choose to increase or decrease the investment amount.
    • It is advised to keep money for a longer time to get good returns.

     

    Why SIPs

    • Our future self is notorious. It always chooses the easy way out. Cakes, fried foods over healthier options. binge & netflix over working out. with SIPs you take savings decision out of the hands of your future self so that a fixed amount is invested automatically

     

     

    Mutual funds:

    • A mutual fund is a professionally managed investment fund that pools money from many investors to purchase a security or a financial asset.
    • Your money is managed by experienced professionals.

     

     

    For age group 16-20:

    • If one develops a habit from an early age itself, he/she is self secured in future.
    • Avoid buying unnecessary things. Think of all those times when you couldn’t buy something but you don’t even feel its absence anymore. “If you buy things you don’t need, you might have to sell things you need.”
    • Invest in yourself – “Ultimately, there’s one investment that supersedes all others: Invest in yourself. Nobody can take away what you’ve got in yourself, and everybody has potential they haven’t used yet.”

    https://www.cnbc.com/2017/10/04/warren-buffett-says-this-one-investment-supersedes-all-others.html

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