Around 3 crores employees are working in central and state government in India. Government employees earn fixed income and they are looking for way to grow money. Investing in time makes them rich in long term. Identifying the investment instrument is very simple. The investment which beats inflation rate 5% is best investment for wealth creation. Investing in hard assets gives better returns. Gold, Real estate, Stocks and mutual funds investment are considered investment.
Mutual funds is not Gambling or lottery. It is easy and simple investment instrument like insurance, FD or EPF.
In this blog, let us discuss easily accessible investment technique which works for 100% government employees. There is potential possibility to earn high in stock investment. But it requires knowledge in equity market, company financials and understanding of the business. It requires time and effort. Only 4% of Indians fall in this category and they earn high in stock market. For rest of us, there is easy and better option: Equity oriented Mutual funds.
All the government employees crack their competitive exam to get government job. They know the formula of compound interest and everyone own PAN card to start the investment.
How to become Rich = Compound Interest + Time
There are 100 of active mutual funds and few index mutual funds. Selecting active mutual funds require detailed analysis of the investment style of the fund. The investment style, expense ratio, fund return vs Index returns, fund returns vs peer returns. Understanding of basic mutual funds is required to start investment in active mutual funds. There is another category of mutual funds, index mutual funds. Index funds are less expensive, associated with Nifty returns. Easily accessible and simple to select as all the index mutual funds investment style is same except the fund house.
Mutual funds is investing in multiple stocks with help of fund manager.
Index funds :
You can start investment of monthly 5000 in mutual fund SIP. Invest 3000 rupees in Nifty 50 index mutual funds, 2000 rupees in Nifty Next index fund. It would provide 13% return in long term. Increase your investment by 10% in each year in SIP. First year monthly 5000, second year monthly 5500, third year monthly 6100…….. Increasing each year by 10% in SIP would give 5 crores after 30 years. Nifty average return is 12% in long term. The return would be approximately 5,00,00,000(5 Crores)
Index funds invests in top 50 or top 100 listed companies.
Nifty Index mutual funds :
Select any one of below mutual funds and invest 3000 rupees in monthly SIP in first year. Every year increase your SIP by 10%. Nippon India allows to start monthly SIP of 100 rupees. So first year you can invest 3000, second year 3300, third year 3700,…….. These mutual funds invest in Nifty 50 index. UTI index mutual funds has long history and less expensive. You can start invest in UTI mutual funds by login to UTI mutual fund portal. In case you are existing customers of SBI, HDFC or ICICI, you can start your mutual funds by login to respective mutual funds portal.
Nifty 50 index fund would invest top 50 company in India.
- UTI Nifty Index Growth Direct fund (Expense ratio : 0.1%)
- HDFC Index Nifty 50 Growth Direct Fund (Expense ratio : 0.1%)
- ICICI Prudential Nifty Index Growth Direct fund(Expense ratio : 0.1%)
- Nippon India Index Nifty Growth Direct fund(Expense ratio : 0.1%)
- SBI Nifty Index Growth Direct Fund(Expense ratio : 0.29%)
- IDFC Nifty Growth Direct fund(Expense ratio : 0.24%)
You start invest 2000 rupees in Nifty junior index. It invests in Nifty next 50 stocks. This would invest in 50 growing companies in nifty such as dabar, Aurobindo pharma and many more. You can start investing in this fund by login to UTI mutual funds portal or ICICI mutual fund portal. Select any of below mutual funds and start invest 2000 rupees in first year, 2200 in second year, 2500 in third year and 10% increase in each consecutive years.
Nifty Next 50 would invest in Top 50 – 100 companies in Nifty index list.
- UTI Nifty Next 50 Index Growth Direct Plan
- ICICI Prudential Nifty Next 50 Index Growth Direct Plan
- DSP Nifty Next 50 Index Growth Direct Plan
- L&T Nifty Next 50 Index Growth Direct Plan
15% of your income in Nifty 50 fund and 10% of your income in Nifty Next 50 fund
You can start investing in index mutual funds by login to respective mutual funds portal. There is another better and simple alternative to this is mutual fund aggregator portal. You can invest in all these mutual funds by login to any one of the aggregator portails, Groww, Kuvera, PayTM money, ET money and Zerodha coin allows to invest all the mutual funds in one portal. Investing 5000 rupees monthly in index mutual funds would give better returns in long term. It requires patience and disciple in investment. Start today by login to mutual fund portal.
It would take 10 min to open mutual fund account. Add your bank account details in mutual fund portal for monthly investment. It would start investing monthly in mutual funds in SIP.
Crorepati = 25% of your salary + For 25 years + Monthly SIP in mutual funds.
How to allocate 25% of your income to investment. Just follow below financial rules. You can easily invest 25% of your income in mutual funds for long term wealth creation plan.
Avoid excessive use of credit cards: You may have to pay very high interest charges – as much as 36% per annum.
Don’t take many loans: A loan comes at a cost of high interest. Do not take loan to buy luxury items.
Don’t invest only in insurance: Insurance is best taken for risk protection via term plan. Do not invest all your investment in insurance. It is biggest mistake in financial planning.
Avoid buying house on loan for tax saving: The years you can use to build you wealth, you end up spending in paying interest to your bank. The bank gets richer, not you.
how can a middle class person become rich in India. Only investment would make them rich in India. Mutual funds are simple and easy way to become rich.
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