Give Yourself the Gift of Compounding This New Year

2018 New Year


So, do you have your New Year resolutions set yet?

Well, while you resolve to get better health or roam the world or add new skills to your resume, you cannot ignore the need for creating sustainable wealth, which, incidentally, will come handy in realising most of your personal goals, year after year.

Wealth creation is often on everybody’s mind. However, most of us find it quite difficult to achieve it. We generally equate wealth creation with the rich or people who have very high salaries or run highly successful businesses.

This is not quite true!

Wealth creation indeed requires lot of patience and perseverance, but it is not impossible for people who have limited means.

“But how?” You’d ask incredulously.

Well, it is not a secret; if you know how compounding works.

Albert Einstein said that compounding is the world’s eighth wonder. He was not wrong. Compounding is a method of calculating returns where the interests or returns earned on an investment too yield interest. Confused, are you?

Consider a situation where you have invested INR 10,000 in an investment scheme that yields you a compounded interest of 10% each year. What do you think your total returns would be?

Well, in a period of ten years, you would have created a corpus of INR 25,937.42, earning an interest of INR 15,937.42. Had you invested in a scheme paying simple interest, you would have earned an Interest of only INR 10,000 over the same period. Read more about the Power of Compounding.

Mutual funds, especially when you invest through SIPs (Systematic Investment Plans), earn you great market returns along with the goodness of compounding. There are millions around the world who are leveraging mutual funds to create enormous wealth. But, like Rome, great wealth cannot be built in a few years.

Try following the below mentioned rules to make your resolution of getting wealthy come true:

  1. Start Investing Now: Did you know that you can invest in mutual funds with as low as INR 500? Yes, you do not require to invest large sums of money to build a great portfolio. Start investing with an amount you are comfortable with and keep increasing it gradually as your income increases.
  2. Follow the 25% Rule: Before paying others, pay yourself. Strive to clear all your debts – and remain debt free, and before spending your earnings, invest 25% of it in good mutual funds. When you invest before you spend, you will never fall short of money to save or invest.
  3. Distinguish between Needs & Wants: Warren Buffet, one of the world’s richest men, says that if you don’t stop buying things you want, you would soon end up selling things you need. It is important that you buy only what you need and curb your desires, especially in this era of incredible online sales that lure you into buying things you don’t need.
  4. Be Consistent. Invest for a Long Period: The key to riches is in small yet consistent investments over a long period of time – say, upwards of 10 years. When you start investing in mutual funds through small SIPs, month on month, your portfolio will gradually start to grow big. Your portfolio may seem puny in the initial years, but it is bound to make you ecstatic after the first three years of investments – it is then when you start to realize the power of compounding growing your corpus.
  5. Get a Good Advisor: While being self-read and informed of the market moves is a good thing, it helps when you take professional help. Try looking for someone who not only commands good knowledge of the market but is also trustworthy.

Nave Marg, under the guidance of Dr. Celso Fernandes – author of two much-loved books on finance and a trusted financial advisor, is on a mission to spread financial awareness in Goa and the rest of the country.

Nave Marg and Dr. Celso Fernandes wishes all the readers a joyous and prosperous New Year 2018!



Power of compounding in mutual funds

Power of compounding

Imagine stacking away a pile of currency notes in a cupboard during your childhood years, which you earned as pocket money from your parents. After some years, say ten, you go back to that cupboard and take a look at that stack of notes. Surely, you would find as many notes of money as were stored by you originally, not a penny more, not a penny less.

Just consider this; had you made an investment of the same amount of money in a mutual fund, you would have reaped some return on that investment, by the simple virtue of leaving that money undisturbed in an investment.

The theory of compounding

Investing in mutual funds yields the benefit of compound returns, which means that an investor earns interest returns even on the interest earned by him. By addition of such returns in the amount of existing investments, the overall return on investment is amplified each time an interest is earned. Mutual funds reward an investor by staying invested for a long period of time.

Take for example

Let us take a simple example to demonstrate the effect of compounding on a mutual fund investment. A mutual fund which yields a return of 10% over a period of year, would amount to a closing balance of 110,000 at the end of one year, for an amount of 100,000 invested at the beginning of the year. Next year, the amount of 110,000 will be taken as the base amount on which an interest of 21,000 will be paid out at the rate of 10%, resulting in a corpus of 231,000, if an additional 100,000 is invested in the scheme. In an analogous manner, the return in terms of interest would amount to 171,500 for an amount of 500,000 invested over a period of five years. This simple example demonstrates the effect the compounding on an investment made in mutual funds that helps in reaping exceptional returns for an investor over a period of time.

On the other hand, had the same amount of money been invested in any scheme that offered simple interest, the investor would have earned a mere 50,000 at the rate of 10% at the end of five years.

The power play of time and investment amount

The results of compounding interest can be amplified by a greater quantum, simply by increasing the amount of investment each year. This seemingly magic trick works s by the simple use of mathematics and percentages, which denotes the compounding effect of a mutual fund investment.

Time is the most valuable and rewarding asset that proves to be a bonus for an investor in mutual funds. The effect of compounding produces such mass and unintuitive results that one can only gasp and exclaim about the magic of compounding for once. Going by historical performance, long term investing in mutual funds is more rewarding for an investor as the added returns, generate even higher corpus fund, on which an investor earns his returns.

Should you go for investing in mutual funds?

If you do have some spare money which could find better use in an investment portfolio, rather than stay idly stacked in low-interest bearing funds or savings account, investing in mutual funds is definitely a strong and promising proposition for you. In fact, mutual funds investments, especially through SIPs (Systematic Investment Plans), which requires small, yet steady investments each month for an extended period, have proved to be the best way for creating substantial wealth in the long run.

With the effect of compounding, you could earn an expansive range of returns, hardly envisaged in an ordinary investment.


Let the Power of Compounding Work in Your Favour


We have often heard the saying ‘money does not grow on trees’, but have you heard the saying ‘money grows on trees of patience?’ Add patience to the process of compounding and you may as well start believing that money does grow on trees!

Compounding is a simple but very powerful concept. Unlike the simple interest method, in compound interest method the rate of interest is paid on principal amount plus the accumulated interest.  So, over a period of time, the money invested in a compound interest scheme gives far better returns than those yielding simple interest. It is, however, important to note that it takes time to accumulate wealth, and compounding does not work overnight.

How long you remain invested matters a lot

To understand this better let us compare two investment scenarios:

Aayush invests INR 5, 000 per annum, from the age of 25 to 35 at the yearly compounded rate of 10%. He stops investing after that but lets the money remain in the scheme, which keeps growing his investment by 10%. Amey, on the other hand, starts to invest in the same scheme at 40 and continues till he turns 60.

Who do you think would have generated greater wealth?

Well, although Amey invested in the scheme for twice as long as Aayush, he could accumulate only a little over INR 3,15000 by the time he turned 60 years, whereas, Aayush, at 60, was able to build a corpus of approximately INR 9, 50,000!

Compounding works the best when you start investing early.

Compounding with SIP

Generally, people are averse to investing a lump-sum amount for a long duration as it deprives them of liquid cash. Mutual funds have resolved this dilemma by introducing the Systematic Investment Plan (SIP). SIPs allow you to invest in any mutual fund by making smaller periodic investments instead of a large one-time investment. Since it involves less money flowing out, it does not significantly affect other financial commitments. In addition to the ease of investing, SIPs also derive the maximum advantage of the compounding effect.

To illustrate, if you make a small SIP investment of INR 1, 000 a month in a mutual fund that is giving an average return of 10%, your portfolio will grow up as follows:

Years Invested Cost of Investment (INR) Corpus Size (INR)
10 1, 20, 000 2, 06, 552
20 2, 40, 000 7, 65, 697
30 3, 60, 000 22, 79, 325
35 4, 20, 000 34, 08, 277
40 4, 80, 000 58, 96, 780


Did you see the power of INR 1, 000?

Compounding, especially in SIPs, greatly helps when the investment, even a small sum, is done regularly for a long period. See, how the money started growing by leaps and bounds after the completion of 20 years!

Understanding the power of compounding can take you on a journey to becoming a millionaire. But remember, compounding is a long-term investment strategy and gives best results only after ten years or more.

Remember the following talisman to benefit from the power of compounding through the ease of SIPs:

Start now, Invest regularly and be Patient.

Mint it Like Joshua Vaz!


Studies vs Sports has always been a topic of debate between parents and their children, with Sports losing to Studies, almost always.

Well, parents are concerned that if their children pursue sports, they would not be able to make a good living as inspite of years of hard work, only a few players, in any sport, steel the limelight.

But parents may take a leaf from the young football icon, Joshua Stan Vaz, who not just chose football as his career – a professional football and futsal player, he is also the General Secretary and a Coach at Youth Futsal Academy, Goa – but also built his first million bucks by the time he turned 25!

Putting an end to the entire controversy over Sports vs Studying, Joshua is showing others the way to be financially secure and follow one’s dreams.

But how did Joshua earn his million bucks while shooting the ball in the net?

Well, he adopted financial literacy.

In other words, at a young age, Joshua learnt the trick of creating substantial wealth – investing small sums of money consistently.

“My journey to wealth creation started at the age of twenty-one in December 2011. I knew nothing about finances and wasn’t interested much in the topic, either,” shares Joshua who, like other boys of his age, was not interested in the matters of finance.

But three years later, Joshua attended a seminar by Dr. Celso Fernandes and a whole new world of possibilities opened for him. Just after the seminar, Joshua chalked out his financial goal.

“I began investing small amounts through SIPs in various different schemes, keeping in mind my financial goal to become a millionaire by 2020,” he shares, “I had this drive and passion inside me that was so strong that I soon became a very aggressive investor.”

Under the guidance of his financial mentor, Joshua kept investing in mutual fund schemes, slightly increasing the SIP amount whenever possible. He also continued dribbling the ball on the soccer field.

In next three years, Joshua’s little money saplings grew to become self-sustaining trees. But he didn’t stop investing. He raised his financial goal to become a crorepati along with his family.

“Today, I, along with my family, have already become millionaires before my goal of 2020. I have crossed the Rs. 50-lakh milestone, and we, as a family, plan on conquering the 1 crore mark we have set for ourselves soon,” Joshua proudly reveals.

The principle of constant investing, couple with the magic of compounding inherent in mutual fund investments, has helped Joshua and his family to realize their goal of attaining financial freedom. He now wants to educate other youngsters on financially securing their future.

“Over the years, I have advised many of my friends and my family to speak about attaining financial freedom to their colleagues. I ask them to share my story to show how starting with a small SIP at a young age can do wonders for you later on in life,” he says.

Like Joshua, Nave Marg Financial Services, too, is working towards creating awareness about financial literacy in the state of Goa – especially amongst school students. The Super Young Achievers Conclave, a Nave Marg initiative, to be held in November this year, is targeted at addressing the students, and parents, on the importance of embracing financial discipline and help them take definite steps towards securing financial independence.

Event Details:

When: 12th November 2017

Where: Main Auditorium, Ravindra Bhavan, Fatorda, Margao

Registration Fee: Rs 300/- for students | Rs 500/- for Others

(Includes Tea, Lunch and free giveaways)


Penny’s Worth


A penny, or, in our country, a rupee, seldom attracts our attention. We dream of millions and billions of rupees. Hence, neglected, the poor penny is ignored and squandered nonchalantly.

But the real power of a penny is understood by only a blessed few. They are the alchemists who know how to turn a penny into hundreds and thousands and even millions!

Don’t lose your heart, yet. The elixir of these wealthy alchemists can be accessed by anyone, provided you look in the right direction.

“Compound interest is the eighth wonder of the world. He who understands it, earns it . . . he who doesn’t . . . pays it.”

  Albert Einstein

Yes, it is the compound interest that helps turn a penny turn into millions, over a period of time.

But how does compounding work?

Well, in a basic interest system, when you invest your money, say in a bank’s savings account, you earn interest on the principal amount invested by you. At the end of the term of the deposit, you get your principal as well as interest earned on that principal during the tenure of the deposit.

Now, in a compounding interest system, during the tenure, you not just earn interest on the principal sum, but also additional interest on the interest earned during the tenure.

For instance, INR 20,000 invested in a scheme paying simple interest at an annual rate of 10% for 5 years will fetch you:

20,000 + (20,000 X 10% X5) = INR 30,000

However, the same amount invested for the same period at the same rate (paid annually) in a scheme paying compound interest will fetch you:

Year 1: 20,000 + (20,000 X 10%) = INR 22,000

Year 2: 22,000 + (22,000 X 10%) = INR 24,200

Year 3: 24,200 + (24,200 X 10%) = INR 26,620

Year 4: 26,620 + (26,620 X 10%) = INR 29,282

Year 5: 29,282 + (29,282 X 10%) = INR 32,210.2

In ten years, the investment in a simple interest yielding scheme will fetch you INR 40,000, while a compound interest scheme will grow your money to INR 51,874.85. The divide between the returns from both the schemes grows phenomenally after twenty years when the simple interest yielding scheme gives you a measly INR 60,000, while the scheme offering compound interest will grow your portfolio to INR 134,550!

In the present day, mutual fund investments, especially through SIPs (Systematic Investment Plan), offer everyone an opportunity to mint additional money and create massive wealth over a long period of time, say ten years or more. This is possible because of the inherent element of compounding present in the way mutual funds work.

In the illustration above, we have assumed yearly compounding of interest and the rate of interest to be 10%. However, over a horizon of 10 – 15 years, mutual funds have given returns to the tune of 15% and more. Also, the magic of compounding works even better with SIPs because the effects of compounding work on a monthly basis. This means that regular mutual fund investments, over a long period, actually turn pennies into thousands, and eventually, to millions.

Now, you too can become a millionaire. All you need is small yet regular monthly investments, under the guidance of a financial expert.

If you are young, in school or college, this is the best time to start investing in mutual funds through SIPs and reach your first million mark before you turn thirty.



Are you banking on education alone to secure your future?

This might sound an absurd question to a school-goer, but believe it or not, it is the most pertinent question a true well-wisher would ask.

Traditionally, as a society, we are raised in an environment where education is of utmost importance, and though the times are changing, most parents and teachers believe good education as the only means to ensure financial security for the children.

Of course, a good education is nothing short of a boon for a child. In fact, it is our society’s persistence and passion for education that is helping Indians shine in every sphere of life.

However, most often than not, we mistake education for an investment scheme. Parents spend a fortune on providing quality higher studies for their wards, with a hope that after gaining a degree, their offspring will certainly secure a well-paying job and live a comfortable life.

Unfortunately, the ROI-based approach towards education has not only resulted in mass production of engineers, doctors and MBAs – leading to mushrooming of thousands of ‘me-too’ institutes of higher studies – but has also sacrificed many young dreams and aspirations on the altar.

Why shouldn’t you bank your future on a good education alone?

The law of demand and supply applies to job markets, too. As parents from far corners of the country pump up all their savings and investments to provide higher studies to their children, they are simply adding to a huge funnel of educated, unemployed youngsters vying for the already dwindling global job markets. In short, in education, your investment is not fool-proof.

What else should be done to ensure a financially secure future for our children?

While education aligned to a child’s interest and talents is a must, parents must also focus on making their children financially literate.

Remember, even a highly educated person with a plush job, and a huge salary can find himself in financial doldrums. It is important the children must learn how to treat money.

With marketers luring unsuspecting buyers at every corner with seemingly incredible discounts, many of us are falling prey to senseless buying – often ending up in chronic debts.

A financially literate person is disciplined with his or her spending and doesn’t fall for such snares. Also, they know the power of small investments, made regularly.

Children, especially the teenagers, have the luxury of time. With little financial discipline, basic awareness of financial tools and small investments (as low as Rs 500 per month), school children can create massive wealth until the time they are ready to take up their first job!

With a sense of financial security at a young age, our children would not be burdening their dreams or desired lifestyle with the anxiety over the next paycheque.

Learn more on instilling financial discipline and imparting financial literacy to teenage children at the Super Young Achievers Conclave, the first of its kind event organized for school children above 14 years of age where the participants can take concrete steps towards making their future financially secure. The conclave will be held on 12th Nov 2017 between 9:30 am to 1:30 pm at Ravindra Bhavan, Margao, Goa. Watch out this space for updates about the event.

The Future is Ours to See


Sixteen is a crucial stage to be in; and not just because it is sweet.

All those who are 16, or thereabouts, are on the threshold that separates carefree childhood from responsible adulthood. This is also the age when we weave dreams about an ideal future.

Of course, we think of a future where we have a beautiful mix of fame, love, money and other attainable aspects of personal fulfilment.

This is an age where nothing seems impossible and no destination looks too far. We are zealous and idealistic. And no matter how the world perceives our future, we have no doubts that it would be splendid for us.

Indeed, it would be!

Opposed to the lyrics of the popular song, que sera sera, the future is very much ours to see. All we need is the right perspective and a bit of planning to realise all our dreams.

Since becoming rich figures into most adolescent dreams about the future – after all, if you are rich, and have a clean conscience, you earn admiration and love from people around you – it is only wise to do something about it, now!

‘How?’ You would ask. Well, by regularly saving and investing little sums of money.

‘Now that is a bit tricky,’ you would say, ‘Firstly, I have no job, so no income, and secondly, I don’t understand the investment gibberish at all. How am I going to save and invest money at the right place, and that too regularly?’

True, you do not have any source of income as of now. But all you need to save is a fraction of your pocket money. Also, there are investment options, such as mutual funds, where you not only can start investments from as low as INR 500 per month, but also get a professional to handle the complexities of investing on your behalf.

‘Hmm, but how can I invest just INR 500 and accumulate enough wealth to take care of all my financial needs and wants as I grow up?’ you would enquire.

Well, all the credit goes to the effects of compounding. The longer you stay invested, the higher returns you get. And of course, as you grow and start working, you can increase the amount of investments.

‘I have heard that mutual funds are quite a risky affair . . .,’ you say with suspicion.

Yes, mutual funds, like all market related investment options, swing between high and low returns. But the truth is, the same volatility (highs and lows of the market) actually works towards increasing your portfolio to astronomical sums, provided you remain invested for a long time, say over 10 years.

After 10 years from now, you could be a 26-year-old millionaire, when most of the people of your age would still be looking for a job or struggling to pay their bills and repay loans from their starting salaries.

A little financial discipline now can ensure you a future full of possibilities. You can choose a better lifestyle, opt for an alternative career, fund your education or simply roam the world.

While lots have missed the golden ticket to start creating wealth from a young age, you still have the ball in your court!


Distinguishing Needs from Wants

Need vs Want

Call it peer pressure or overexposure to technology and information, we often see our children, mostly teenagers, always pestering their parents to buy this or that. Whether it is a newly launched gadget or an advanced game console, or a pretty dress, our children are seldom out of their ‘I Want’ mode.

As parents, we meet most of their demands; partially because we want to compensate for the time we didn’t give them, and partially due to our own desire to give our children all they want.

But beware! If we do not teach our children to curb their wants now, we are preparing them to be financial disasters as they grow up.

Teachers and parents, both, must teach the young generation to distinguish between needs and wants.

Studies show that teenagers in India are increasingly spending their money on apparels, eating out in fancy restaurants and cafes and gadgets. Brand obsession, seemingly irresistible online deals and social media-induced identity crisis continually prompt youngsters to spend more and more money. As a result, they keep buying things they hardly need and have no financial discipline.

Teachers have the power to influence their students’ minds. Hence, there is a great opportunity for the teachers to help their students learn the concept of ‘need vs want’ and motivate them to embrace financial discipline from an early age.

How to teach students to distinguish needs from wants

Here are a few fun exercises through which students will learn to introspect and understand the difference between wants and needs as well as the benefits of being financially independent:

  1. Life-Goals Vs Material Wants

Young students have a fair notion of what they want to do in their lives. Ask students to write down their key life goals on the left column of a table. Now, on the right column, ask them to list down the top things they want to buy in their lifetime. Ask them to match both and find out how their wants will help them fulfil their life goals.

  1. Wants vs Needs Game

The popular online game – Needs vs Wants ( can be emulated in a classroom setting. The simple questions asked in the game help children distinguish between needs and wants. This seemingly simple exercise will have a long-lasting impact on the students’ minds and will help them make better financial decisions as grownups.

  1. Make a model family budget

The reason why students may not effectively distinguish between needs and wants can be their ignorance about the concept of ‘limited means’. Parents often do not discuss their financial situation with their children – to shield them against any sort of insecurity or stress. However, children who have no clue about how much their family can spend on needs and wants, tend to think that there is always enough to spend on needs as well as wants. Teachers can introduce the concept of budgeting and rational expenditure through a model family budget. Giving students a chance to better manage the budget would be a great learning opportunity for students.

  1. Teach them how to grow the money plant

Putting your students completely off their desires and wants may not be possible. Hence, it is best to teach them the concept of delayed gratification. Also, introduce them to the concept of “Time = Money with Compounded Benefits”, which means that if invested wisely and regularly, say in good mutual funds through SIPs, over a period of 10 years or more, the money can grow manifold, giving students an opportunity to buy what they ‘want’.

  1. Real Life Stories

Stories are a time-proven and fun way of imparting morals and values to children. Narrate real-life stories to students where people have gone from ‘riches to rags’ owing to their bizarre spending habits or poor money management. Each of us dream of the untold riches, and we all cringe and get affected when we hear a story of a multi-millionaire losing everything and living in poverty. We learn our lessons from real stories.

The road to financial freedom

We see money as the root cause of many evils because we choose to be a slave to money. But by curtailing our wants and inculcating the habit of regular investments, we can change this equation and be financially free. The first step to reach financial independence is distinguishing needs from wants, and our teachers can contribute significantly in this area.



It is the farewell day for the outgoing Senior Secondary class. All boys and girls are experiencing a mixed bag of feelings; the joy of starting an independent life – the anticipation of the college life, and the ache of parting from lifelong friends.

They all sing and dance and click pictures in groups.

Ms Neelima, the Headmistress, can’t help but muse over their future and what life will bring for them.

In the school, they are treated just the same. They wear the same uniform, pay the same fee and are bound by the same rules. In a few years, they will be adult, responsible citizens. But life will not bind them by the same rules or treat them equally. While some of them will reach the stars, the others will struggle hard to stay afloat.

“Why do we have such inequality in our society when we raise all our children alike?” Ms Neelima could never find an answer to this question, no matter how hard she tried.

A few days later, in a chance meeting with a person, who happened to be a financial expert, Ms Neelima got her answer. She was surprised to learn that the answer to her tormenting question was so plain and simple.

The financial expert told her that financial illiteracy is the reason why children from similar educational backgrounds perform differently in their lives. While some of the students will go on to create lot of wealth and live a life of comfort and abundance, the others will live from paycheque to paycheque.

“We teach our students mathematics, science, accounting, arts and so on. We also teach them moral values to live in harmony with people around them, but we never teach them to manage their finances,” the financial expert told Ms Neelima.

He went on to tell her that we are letting generations after generations of financially illiterate students grow up into financially stressed adults – except for a few who get timely financial guidance.

It is not the lack of opportunities – certainly not in present times – why our nation is still grappling with poverty or low household income. It is the financial indiscipline and financial illiteracy that leads to bad money management.

The financial expert helped the Headmistress chalk out a 5-step program to instill financial discipline among her students, from the age of 15 years:

  1. Introduction to Financial Literacy

Invite financial experts and advisors to explain the need and nuances of financial literacy. Stress on the power of compounding and its role in wealth creation.

  1. Setting Personal Goals

Teenagers have many dreams. Help them shape these dreams to quantifiable and achievable goals. One-on-one sessions, preferably in the presence of parents, are an ideal way to achieve this.

  1. Lessons on Mutual Funds Investments

It is never too early to learn the concepts of financial markets and the concept of compounding. One basic tenet of wealth creation is time; hence, students must be taught that staying invested in mutual funds for long time periods is the easiest way to create wealth. 

  1. Coordinating with Parents to encourage habit of regular saving & investments in their ward(s)

Teachers must educate parents about the need to make their children more financially disciplined. Encourage parents to start regular investments in mutual funds (through SIPs) in their child’s name. 

  1. Differentiating Needs from Wants

Encourage students to keep a track of their investments and motivate them to continue investing for at least 10 years to become young millionaires. Teach them to differentiate between needs and wants, enabling them to make spending decisions in accordance with their financial goals.

Ms Neelima is religiously following the financial literacy program in her school. She can already feel a positive vibe in the school, and though it will take a long time, she knows that, in the future, the students passing out from her school will be financially independent and even wealthy adults.

Ms Neelima found the answer to the question tormenting her . . . have you?

Nave Marg Financial Services is led by Dr Celso Fernandes, author of two widely distributed and much-loved  books on wealth creation, who is on a mission to alleviate social sufferings caused by financial distress by spreading financial literacy, especially among the young generation.

Is Investing a Game Reserved for the Rich?


In our last blog, we stressed on the need for our teachers to work towards attaining financial independence. If set free from the financial pressures of every-day life, our teachers would certainly be able to contribute more towards the growth of their students. Once their future is secured, our teachers would be able to put all their focus on securing their students’ future.

But how to save money for investing in a small income?

Traditionally, it was believed that investing is a game reserved only for the rich. After all, you need money to make money!

Thankfully, with the advent of financial instruments like mutual funds, everyone can dare to dream of becoming a millionaire – by regularly investing a small amount of money.

But what are mutual funds? Are they safe to invest?

A mutual fund can be explained as a pool of small funds owned by thousands of people. All mutual funds are managed by qualified and experienced Fund Managers who invest the fund (pool of money) in various investment vehicles as per the fund’s core philosophy. So, for instance, an equity fund will have a major portion of the fund invested in equities, and a debt fund will have the major allocation in debt instruments. Since all market-related schemes have different levels of risks and rewards, mutual funds, too, vary in terms of risks and rewards.

It is proven time and again that if invested for a long time, say over ten years, mutual fund investors reap phenomenal financial gains.
Moreover, investments in mutual funds can be started with as little as INR 500!

Yes, you do not need to cut down your expenses substantially, yet can march on the road of wealth creation. Seems implausible, right? Well, this is the magic of compounding!

When you make the right investment, your money starts working for you instead of you working for money.

When you religiously invest, even a small amount of money each month for a long period, you let the effects of compounding as well as movements of market work on your portfolio and enhance it significantly.

Why are mutual fund investments the best for honest, hard-working people with limited salaries?

  • Unlike investing in property or gold, which requires a hefty sum, mutual fund investments can be made by paying small instalments of money each month through SIPs (Systematic Investment Plans).
  • Traditional favourites, NSCs and FDs give returns lesser than the inflation rate, which means that your portfolio gains negative returns (or simply, you lose money instead of making it).
  • Investing in mutual funds is totally transparent and easy.
  • Mutual fund investors have the convenience of selling a part of units to meet an urgent requirement, while the rest of the units remain invested.

The phrase, “Time is money,” is as true as it gets; especially when it comes to investing in mutual funds. Those who stay invested in the market for the longest period of time, benefit the most from the combined effects of compounding and market volatility.

In fact, investing regularly till the age of 60, a teenage boy who starts investing as low as INR 500 per month at the age of 16 tends to grow a portfolio far greater than a man who starts investing INR 5,000 per month at the age of 40!

Hence, there is an opportunity to educate our younger generation about investing and making them financially disciplined. And who could do a better job than our beloved teachers?

By being financially disciplined and aware about investment opportunities, our teachers can not only secure their future but can also teach financial discipline to their students, helping form generations of financially independent citizens who are happy, free and willing to give back to the society.