Capital guaranteed only upto 5 lakhs in india , as you have pointed out you can check with multiple bank closures across world especially USA how much hard earned money lost on top of it old people , kids are standing in queues to rake their money out .
Its still the very very intelligent tool created over last century to literally loot people especially hard earned salary money .
Can you show me 1 billionaire / millionaire who puts money in FD ? Never found one till date .
All the rich park money mostly in gold / real estate / debt worst case scenario they buy art but never put in FD . Infact they borrow so much so that all banks they have loan accounts.
Currently FD generating btr returns due to high interest rate but look at any developed country most of them have negative returns. One two cuts from now will end up at 4% which wont cover inflation.
Not quite. This is the problem with people. I was little wrong about FD’s and interest rates itself. It’s true interest rates are cyclical. But the real thing is sometimes or atleast majority of times it’s negative Interest rate. You just can’t see it ,that’s why it doesn’t bother people just like shrinkflation.
If inflation is 8% and FD returns is 7% , you are really not making any gains here. Also FD purpose is specific , say you are gonna use FD for your kid’s college fees, but education fees is skyrocketing grows at 14% , what are you gonna do here? Or if you saved up upgrading PC where inflation rate of PC parts is more than bank FD rates?
I think for now atleast 1-2 years FD is good but for long term index is far better
Again, this is also passive. You are just choosing 1 or 2 stocks doing a regular SIP. which is the same as doing an MF SIP.
By active Investment, I mean that you invest in stock or index or gold, or any instrument when there is a good opportunity to enter and then wait for another good opportunity in the same instrument. you have to check the market actively. (let’s say on a weekly basis).
Your 1st investment is maybe today then you wait for another entry opportunity, it may come next month, next week, or even after 4-6 months later. you just have to be ready with cash.
(THIS IS MORE BORING THAN WHAT YOU ARE CURRENTLY DOING)
Not simple as it sounds. This is a skill you need to Learn.
“Market is not INVEST AND FORGET anymore.” some activity is required.
Capital preservation is important. I am just saying if you have some risk appetite then you can experiment with 1% of your capital.
Fair point. Unfortunately, that’s the only way I can at best operate. Can’t wreck my brains over research plus don’t have time to do so with my current job.
So let’s see…
Plus my current flow of money is either monthly, quarterly or yearly. Whenever it comes I deploy it across different modes.
Would smallcase be any good for me? That’s the only thing I could do at this juncture. Or I’m better off being in Mutual funds only.
So the above which you have quoted applies only to FD. Does the same logic apply not apply to Mutual Fund. Do you guarantee that all Mutual Fund gives you 12 to 14% return with Capital protection so that it beats inflation for ever and ever. No the rules are the same, so apply the same rule for both FD and mutual fund equally.
Just to add on a little bit more. FD or even debt funds for that matter can’t make you a millionaire. Yes. The value of your investments will increase but at the same time because of differential interest rate in India and US, rupee will depreciate. So if one USD is 90 rupees then you need 9cr to be a millionaire now. So as you accumulate more and more out of FD and try to reach the target of a million USD, the target just keeps shifting further.
If there is inflation in US, then a million won’t have the same purchasing power as a million now does. Eg. if you now need 1Million to buy a house, you would then need 1.5 million to buy the same house. So on absolute basis you may feel you are a millionaire, but your purchasing power doesn’t increase.
The definition of a millionaire is one who has network of above 100,000USD. That’s the way it’s measured.
If there is no standard way of measuring don’t you think India has more millionaires than US?
Because we don’t have million system. It’s the term from US. We have crorepati. A person having network of more than 1cr INR is termed a crorepati.
May be you can take some assistance from google search.
its matrix like we have lakh pati , crore pati,arab pati in India , similarly in US its Millionare , billionare , trillionare. Just like in US no body use lakh pati ,crore pati similrly for india we don’t use millionare . If we are using than its has to be converted from USD to INR.
Arey my point had got nothing to do with your argument on FD. All that I wanted to do was correct you on the term millionaire.
Whether a millionaire invests in FD or not is secondary.
You already have a very good amount of money, probably from a decent salary. If at 30 you can make this much, then you should have what you need soon enough without changing anything.
FD allocation does seem too much, is generally worse than alternatives and potentially not as secure by being concentrated. ofc SBIN FD for example is probably safe enough. So diversify this into something like gilt/short term funds without credit risk and can add more to Index funds and hold for long term. I think others have already said this much.
Active investing / trading on your own - I do not think this is worth it in your case if you don’t have a strong interest. Because a) you are already in a v good position, b) Most people who try active, fail ( like 90-98%) c) Some people fail spectacularly and lose everything - These kind of people cannot manage emotions and take too much risk too soon. d) So given a), risk is not worth it and you should focus on your career.
But if you have a strong interest in the market. Trade/Invest small and learn. It will take many years before you might find your feet, so keep losses small until then.
Over long term, diversified Equity will probably give best returns, generally upwards of 10%. That is the best way to beat inflation for most. But it can be very volatile. Just keep holding, buy on SIP, buy when market dips/crashes. DONT sell on crashes and hold for 10+ years. Reduce allocation in good times if you have some target time of taking some money out of equity. Its ok to take out most of the time, but sometimes you can get crashes and that is when you dont sell. Gold generally should do worse, but dollar adjusted returns for Indian markets have not been very good this decade, so they are both similar now i think. Anyway SGB is very good option and gold might work well in combination of equity and debt.
Min amount 5 lakhs , currently SBI paying 6.5% FD so im willing to pay 8% upfront , same lock in period same quarterly update of interest rates all rules applicable same as FD.
I have a hard time trusting big/established banks, brokers & institutions. But random people on the internet want me to trust an agreement i make with them!
I have only 865 rupees now. So I thought in next 3 months I could accumulate another 135 and make it 1000 and give you. Anyways. It’s not happening. Thanks for the offer.
If you come up with any other offer please keep us posted.