Level of understanding required: Beginner
Ok, so you are an absolute beginner to investing. That’s fine. We were too.
Typically, if you are here, you generate some income and then spend a bit of it and the rest is saved. This saving – say X is an asset of yours which stays with you till you spend it away on something.
Investing comes in here where your X is put to work to make it X+something. That something or some value will depend on how you are investing it.
So, to keep things simple, lets invest your X or your savings.
Typically, anywhere you invest, you should get a return on that X. The higher the return, the better it is.
Let’s begin from the learnings of my investing journey. My initial investments were done by my father. These were during my school days. On special occasions, I would get some money from relatives and friends and my father would invest them in policies suggested by banks.
Fast forward 10 years – I suddenly got a sum of $3000 from an investment which matured. I was over the moon initially but then after a while it dawned on me that the investment was $1500. It had merely become double in 10 years. This didn’t sound right.
I started researching and realized that in my country, the safest investments should give a return of 6-7% and that would make it double in 10 years – that’s where dad had invested apparently. Well and good.
However, how could I take a bit more of calculated risks and improve upon this return to touch say 10% - which would mean doubling my money in say 7 years. So I dived into the world of investing research around 2002 and over 20 years found my sweet spots in investing – and even today continue to improvise upon the knowledge.
Again, forwarding the time, this was 2011. By this time, I had found mutual funds which generated returns of 14-15% annually. That’s a long story which I will cover in other blogs but stay with me at how this 14-15% changed my life. In 2010, my son was born. Again, in line with traditions, he received monetary gifts from friends and relatives on various occasions. I kept dumping them into mutual funds. This is 2023, and his money has become 5X. This means, the money doubled in 5 years – so by 2016, his money had become 2X. The 2X stayed invested and by 2021, it became 4X. 2 years down the line in 2023, it is now 5X.
Now imagine that you had $10000 and it became $40000 after a point of time. This is a money you didn’t need so you just parked it and it grew. Imagine parking a used Toyota in a parking lot and coming back to it after 10 years to see it transformed into a BMW! That’s the best power of investing any surplus that you have.
So, this is the reason we invest. Today, my son who is 13, has started investing. Not directly, but through me. Whenever he gets a monetary gift, he invests anywhere between 80 – 100% of it. He is growing his investments and the best factor of investment is time spent – which he has inculcated early on in life.
So start today for a better tomorrow.
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