Get Going with Investments

All our life, we are encouraged to save money. Whether as parents, spouses or children, we take our mandatory lessons on the importance of savings. Our personal preferences may make us careless spendthrifts, yet we all acknowledge the need for saving money. And this household phenomenon is worldwide as the chart below tells us:

Source: OECD Data & Saving in Asia: Issues for Rebalancing Growth. ADB Working Paper Series. ADB. Manila

But what about investments? Are we taught to invest? Certainly not by convention.

In our single-minded pursuit to save money, we ignore the fascinating and rewarding world of investments. If savings give you short-term comfort, investment is a long-term assurance. Savings can deal with emergencies but investments help you make planned outlays in line with life’s critical milestones. Most important, investments help you beat inflation, savings offer much low returns if you adjust the inevitable factor of inflation.

Once we acknowledge the need for investments, we turn to the avenues. The market offers you plenty of options. Have a look -

But they, by no means, reflect equal risk and returns. Each comes with its own pros and cons. We have to choose that product that best meets our financial needs. And we need to ensure such returns that will beat the elusive animal called inflation.

Effective value of Rupee over 2002-2009 with base 100 in 2002    Source: CIA handbook

The capital markets are one of the most promising investment options for the following reasons:

  • They have historically outperformed all other asset classes – CAGR of over 19%
  • They guarantee tax-efficient returns
  • They can be customized to individual risk appetites
  • Both Investment and redemption is quick and easy
Comparative Returns on Rs. 1 lac invested in 2003

So, how does one get going with investments? It’s easier than you would have imagined.

Just approach any of the 36000+ branches of NSE brokers with your PAN card and bank account. They will open a demat account for you as also a trading account. Before you realize, you are done. And you can do this in umpteen ways:

  • Via Phone (Call In Trades) (provided broker offers this facility)
  • At broker’s branch
  • Via Internet
  • Via Mobile Phone

So, before your tryst with your broker begins, let’s summarize your rights and obligations. This will help you play the investment game with authority and agility. Happy investing!

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