As the popular TV show Shark Tank continues to captivate audiences across the globe, it has become a platform for entrepreneurs to showcase their business ideas and seek investments from some of the most successful business leaders.
While the show offers valuable insights into the world of entrepreneurship, it also sheds light on the importance of financial planning and investment strategies.
One of the newest sharks on Shark Tank India, Radhika Gupta, CEO of Edelweiss Mutual Fund, has shared some insightful investment tips that are likely to hold investors in good stead.
Gupta emphasises the significance of saving a portion of our income and investing it wisely. She advises that after deducting taxes and expenses from our earnings, one should strive to save at least 20%, 30%, or even 50% of the remaining amount.
Alternatively, can begin making monthly systematic investment plans (SIPs) to cultivate a habit of investing. This may seem challenging to some, but Gupta reminds us that saving and investing are essential for long-term financial security.
Here are the importance of savings and systematic investment plans
Financial security and emergencies: Having savings allows individuals to handle unforeseen expenses and emergencies without resorting to debt or liquidating assets. Savings provide a cushion during tough times and can help individuals maintain their financial stability.
Achieving financial goals: Whether saving for a down payment on a house, funding higher education, or planning for retirement, having a financial goal is crucial. Mutual fund SIPs provide a disciplined approach to saving, enabling individuals to systematically invest towards their goals. Regular savings allow investments to grow steadily, compounding returns over time.
Diversification and professional management: Mutual funds pool money from various investors to invest in a diversified portfolio of stocks, bonds, and other assets. This diversification reduces risk by spreading investments across various sectors and securities, making it easier for individuals to access a professionally managed portfolio. Mutual fund managers are experts who aim to maximise returns while managing risk, ensuring optimal growth for investors.
Flexibility and convenience: The monthly SIP approach offers flexibility to investors. They can start with small amounts and gradually increase their investment over time. This flexibility allows investors to align their savings and investments with their evolving financial situation and goals. Additionally, SIPs can be easily set up and managed online, making the investment process convenient and hassle-free.
Long-term wealth creation: Investing in mutual funds through monthly SIPs has the potential to generate significant wealth in the long run. By investing regularly over an extended period, investors benefit from the power of compounding. The compounding effect refers to the reinvestment of generated returns, which can lead to accelerated growth over time. Starting early and staying invested can result in substantial wealth accumulation.
Tax Benefits: Certain mutual fund schemes, such as Equity Linked Savings Schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act. Investing in these schemes through monthly SIPs can help individuals save taxes while building wealth.
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Published: 13 Feb 2024, 05:31 PM IST