Are Mutual Funds Investments The Way To Becoming Rich?
There is hardly anyone among us who does not want to be rich, but the biggest obstacle in this path is the income of the people. People whose income is less, think that they can never become rich. If your income is less and you also want to become rich, then today's article is only for you.
Most people invest in the share market and face losses. You must have heard from such people that the share market is useless and there is no benefit to investing in it. The real story is that such people start investing in the stock market without any knowledge just on the advice of others and end up with losses. If you do not have knowledge of the stock market then you can invest in mutual funds. To know about the stock market, you should watch this video of Dr. Vivek Bindra -
How Do Mutual Funds Work?
If we invest in shares then all our investment is in any one company and if we do not know the share market then we cannot tell about the future of that company. When we invest in mutual funds, our investment is shared by knowledgeable people who understand the stock market, who are called fund managers, and such companies are called asset companies. Instead of investing in a single company, they invest your investment in different places (shares, bonds, etc.), thereby reducing your chances of loss.
Mutual Fund works on compound interest, suppose you invest Rs 100 in the first month and it earns 15% interest, then in the next month the amount will grow to Rs 115, and then it will get 15% at Rs 115. Along with this, if you invest Rs 100 in the next month also, then in the second month you will get 15% on your Rs 215.
Now for example, let's assume that you invest Rs 5,000 every month at a 15% rate for 10 years, then in the next 10 years your investment will be Rs 6 lakh and you will get a return of Rs 7,93,286 i.e. In total, Rs 13 lakh 93 thousand 286 will be received.
As your income increases, you can increase the amount you invest in mutual funds and hopefully, your returns will also increase. If you invest in mutual funds consistently, you may become a millionaire through exposure to contracts.
50 - 30 - 20 Rule of Investing:
The 50 - 30 - 20 Rule of Investing is written by Elizabeth Warren and her daughter Amelia Warren Tyagi in their 2005 book "All Your Worth: The Ultimate Lifetime Money Plan." As per this rule, a person should divide his job into 3 parts:
- 50% on Their Needs: Individuals should spend 50% of their income on their needs like Rent, EMI, Food, Transportation, Clothes, and Bills. It depends from person to person.
- 30% on Other Needs: We have expenses other than these needs, such as cars, vacations, expensive dresses, smartphone cities, etc., on which we can spend 30% of our job earnings.
- 20% on investment: Staying conscious of the 50 - 30 - 20 rule of investment, we should keep 20% of our income for investments.
You can also change the 50 - 30 - 20 rule of investment with your senses. If your income is more and you feel that you can spend less on other needs, then you can invest that amount and make this rule 50 - 20 - 30 instead of 50 - 30 - 20.
You often hear the line that mutual fund investment is the credibility of the market, but if you invest consistently in a good mutual fund, this investment can secure your future and make you rich by investing consistently.
Famous investor and industrialist Warren Buffet has a quote that "Never depend on a single income. Invest to create a second source." If you invest in mutual funds, it will provide you with a second and stronger source of income. Start investing a part of your income in mutual funds from today itself and you can be on the path to becoming a future millionaire.
Work on applying these straightforward yet insightful lessons from Shark Tank India's second season to your personal and professional life. You'll definitely be headed in the correct direction. You can enroll for the Anybody Can Earn Webinar to know more about the facets of making money and multiplying it as per your wish. To Know More, you can visit Bada Business.