Invest In Equities

Investment in equity is one of the few ways of making big money - sometimes very big money. However, it comes with the risk of losing money - sometimes the entire amount. Therefore, despite great potential, investing in equity is negligible in comparison with bank deposits / mail scheme. Fear of loss is just too overwhelming.

Yes, except for investments in capital is not easy.

- You must have sufficient knowledge to understand the economy, markets and annual reports

- You have to spend much time analyzing the balance sheet, income statement, cash flow statement

- You need to track your portfolio almost on a daily basis

- Maybe you do not have enough body to build a diversified portfolio of meaningful

- Due to the sharp market volatility is never sure when you buy / sell

- All the news flow, the hype and conflicting opinions in the media only adds to confusion

- I can not rely on the advice that, more often than not, they have a trick to fool the

- Time and again scams in the market eroded investor confidence

- You have to open Demat / c

Given all this, it is not difficult to understand why most investors prefer the simplicity and safety of the bank / post office deposits.

But there is a way. Yes, there is a simple and safe way to invest in equity.

Yes, you can invest in equity without the above-mentioned problems. Yes, you can invest in the capital with almost zero possibility of losing the entire capital. The answer is - the content of the SIP funds.

When you buy index funds (or nifty SENSEX), and invest in the best 30/50 companies.

- No need for you to analyze the balance sheet, income statement, cash flow statements of the top companies. They already monitors MFS and FIIs and other institutional investors

- Corporate management in these large companies is well

- Due to the large and diverse base of ownership, the chance of share price manipulation are low

- Fraud usually happens in small and medium businesses. Even if the fraud in any large company, it can be one-off case. Moreover, it will be dropped from the index. So his influence, over time, will be negligible

- Index funds do not require the fund manager

- All index funds are more or less the same. So, no problem about how to choose the best funds

- Fund management cost index funds are among the lowest

- Since this is a SIP, you need not bother about that when you buy

- No need to accompany him. When you get old company and new companies enter the index, the Fund will take care of it.

- Can the diversity of the entire upper end of the market even in Rs.500/Rs.1000

- No need of Demat / c

Thus, investing in index funds is as simple as a bank FD / RD.

Now, let's look at the safety aspect.

I have some number crunching on the couches of his birth in the mid-1990s to 1 week of May 2012, ie a period of nearly 21-22 years. I did the following

a) What were returned after 5 years, if not sip Rs.1000 for 5 years (60 months) begins on any day (about 4000 data points)

b) What were the returns after 10 years, if not sip Rs.1000 for 10 years (120 months) starting on any day (about 2800 data points)

Here's what I noticed

5-year SIP

Amount of investment: Rs.60, 000

Max. Value / Return: Rs.174, 000 / 37.14%

Min. Value / Return: Rs.45, 450 (-11.40%)

Avg. Value / Return: RS 84 400 (12.84%)

% Negative yield: 20%

10-year SIP

Investment amount: Rs.120, 000

Max. Value / Return: Rs.508, 000 / 24.29%

Min. Value / Return: Rs.103, 450 (-3.01%)

Avg. Value / Return: RS 250 400 (13.25%)

Negative% yield: 7.8%

So, as you can see,

- Even in the worst case loss was only 11.4% at 5 years SIP. So, do not worry, you will not lose their entire capital.

- The probability that the loss was less than 8% at the 10-year horizon and that only 3% in the worst case.

- Even the average return of about 13% were far better than returning to the FDS (indeed these returns are tax free, while your FDS will be taxable on your tax slab)

- Treat as a long-term equity investments for those 10-15 years, such as your insurance or PPF (or at least a 5-year NSC) and will probably end up with very good returns

By the way, suppose you started sips during the euphoria of January 2008, when he was on the sofa, then an all time high of 6288, but after that four years have been the most turbulent and uncertain markets in history. Despite the markets and trading down nearly 1000 points in 5220, and will still be available today [5.38%].

So, that's it - simple and safe way to enjoy the fruits of capital - and smart too.