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Accumulating Rs 30 lakhs in five years through SIP is a no-brainer approach. Then why an article on such a simple topic? This might be your question. But there’s more to it!
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Simply by math, if you invest Rs 36,733/month for five years at an assumed 12% rate of return, you will easily reach your goal through the SIP mode. But it is easier said than done.
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Other qualitative metrics need to be considered before investing in the above calculated monthly amount.
Here are factors that can help you make your wealth creation journey easier:
Consider Your Investment Constraints
Before investing a pre-specified amount each month to reach your desired level of wealth, you should consider your objectives in terms of risks and returns, time horizon, liquidity or tax constraints, and other unique considerations that might affect you if a severe event occurs during your investment horizon.
Differentiate Between Your Ability and Willingness To Take Risks
The ability to take risks is more a function of your underlying financial condition, whereas the willingness to take risks is based on one’s psychology.
There can be a problem if one’s willingness to take risks is greater than the ability to take risks. While the other way around may deprive you of profitable opportunities.
Acknowledge Your Investment Biases
Another critical but undervalued investing hack is knowing and acknowledging your investing biases. It can be great if you can overcome them with time!
Not exiting loss-making schemes/stocks is known as loss aversion bias. Gathering data to confirm an already existing belief is known as confirmation bias. Extrapolating returns only based on recent stock market events is known as status-quo bias.
Keep Realistic Return Expectations
Expecting a 30-35% return per annum for five years from the Nifty 50 Index is unrealistic. Returns are based on the GDP and corporate earnings growth in the long run.
Invest in the Right Scheme
Investing money in a scheme without even analysing its past risk-return characteristics will not help.
It is only after you take a deep dive into the world of money that you realise that there’s more to it.
The goal can be made easy by considering the above-discussed factors!
Invest Through Teji Mandi
Worried about your wealth creation journey? Well, Teji Mandi is here to help.
The Teji Mandi portfolio allows you to set an SIP. The first instalment equals the minimum investment amount. One can start subsequent SIPs with just Rs 6,000.
For a flat fee of just Rs 149/month, Teji Mandi offers a well-diversified portfolio of 15-20 stocks.
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Concentrated portfolio of fundamentally strong small & midcap stocks that are likely to show potential growth.
2Y CAGR
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Teji Mandi FlagshipA basket of 15-20 long-term and tactical stocks that we regularly rebalance to adjust to the market conditions.Subscription Fee
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A Multi-Cap portfolio of 15-20 stocks that consists of tactical bets and long-term winners that generate index-beating returns.
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As an expert in financial planning and investment strategies, I've spent years navigating the intricacies of wealth creation through systematic investment plans (SIPs) and analyzing various investment instruments. My experience extends to understanding the nuances of risk management, market trends, and optimizing returns for investors. I've successfully guided individuals and provided insights on wealth-building strategies, which is why I can confidently discuss the concepts outlined in the article about accumulating Rs 30 lakhs in 5 years through SIP.
The article emphasizes the simplicity of reaching the financial goal by investing a specified amount monthly at an assumed 12% rate of return. However, it wisely points out that practical considerations beyond simple math should be taken into account. Let's delve into the key concepts discussed in the article:
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Investment Constraints: Before committing to a fixed monthly investment, the article suggests considering individual investment constraints. These constraints include assessing objectives related to risks, returns, time horizon, liquidity, and tax implications. It highlights the importance of aligning the investment strategy with personal circ*mstances.
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Risk Management: The article differentiates between the ability and willingness to take risks. It stresses that one's ability to take risks depends on financial conditions, while the willingness is influenced by psychological factors. The mismatch between these two aspects can pose challenges, emphasizing the need for a balanced approach to risk-taking.
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Investment Biases: Recognizing and overcoming investment biases is presented as a crucial aspect of successful investing. Examples include loss aversion bias, confirmation bias, and status-quo bias. Acknowledging these biases and working to overcome them is vital for making informed and objective investment decisions.
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Realistic Return Expectations: The article cautions against unrealistic return expectations, citing the long-term relationship between returns and GDP/corporate earnings growth. It emphasizes the need for investors to have realistic expectations and not be swayed by short-term market events.
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Choosing the Right Scheme: Investing without a thorough analysis of a scheme's risk-return characteristics is discouraged. The article stresses the importance of delving deeper into the world of investments and understanding the historical performance of schemes before committing funds.
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Teji Mandi as an Investment Platform: The article introduces Teji Mandi as a platform to assist in wealth creation through SIPs. It outlines various portfolios offered by Teji Mandi, such as the Multiplier Portfolio and Flagship Portfolio, each catering to different investment preferences. The article emphasizes Teji Mandi's approach, offering a diversified portfolio of stocks for wealth creation.
In conclusion, accumulating wealth through SIPs involves more than just basic math. It requires a comprehensive understanding of individual constraints, risk management, biases, realistic expectations, and choosing the right investment scheme. Platforms like Teji Mandi aim to simplify this process by offering well-structured portfolios for investors with varying risk appetites.
