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Friday, November 4, 2016

The Ultimate Cheat Sheet On Investing

Smaller Investment today leads to greater returns tomorrow. You should start investing right from the time you start earning. Start investing at least 10% of your earnings during initial years but increase the percentage to 30% so that you will be secured even during volatile phases of your life. There are few things one should remember and these create an interest for investing more and more money
The Ultimate Cheat Sheet On Investing

The Magic of Compounding: If you can remember compound interest theory from your high school maths, you are blessed. I will explain the theory with an example. A person started his career at the age of 22 and planned to invest Rs10,000 from his salary as recurring deposit in one of the banks with 8.5% rate of interest for a period of 25 years. 

Can you imagine the maturity amount? It is absolutely Rs 1 
crore. That's the magic of compounding. 

If you have risk to bear I will tell you another example where you can earn still more money.

Mohit has a blessed family and he started his career during the age of 22. He got a good job in a multi national company with a decent salary. He doesn't have any family responsibilities as his parents are not dependents. So, he used the risk formula and calculated the percentage of risk he can take at his age.

Percentage of risk to be taken = 100 - (minus) your current age

So, his risk meter is 88

So he has taken 88% risk and started investing in High risk mutual funds as SIP (Systematic Investment Plan) which would on average give 15% returns on maturity. Do you know how much he earned? Absolutely Rs 2.75 crores
That's the magic
No Risk No Returns: Risk Proportionates returns. there will be no higher returns with lower risk and you should not believe the online frauds which say about easy money. There is nothing like easy money concept.

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