Having a purpose in mind is extremely vital regardless of what you do. It serves as a guide until you reach your goal and gives you a sense of satisfaction and achievement.This applies to saving and investing too, and that’s why purpose- based investing is better way to create wealth than chasing returns. It can be explained as under : –
When you Are Driven By Greed : –
If you let greed drive your investment strategy, then the goal would be to make more money. In order to reach that goal, you might fail to check how safe the investment option is.
When You Are Driven By A purpose : –
When your purpose takes precedence ,you would operate on a clear, time-driven approach. Your approach would be more disciplined and you wouldn’t get affected by the ups and downs of the market. You will also choose safer and apt investment options that align with your financial goals.
How To Become A Goal- Based Investor : –
The first step is to have a goal and define it with a target amount and timeline. It could be saving for your retirement or becoming a millionaire. Once the goal is set, select your frequency of investment. It could either be a one-time investment where you invest a certain sum of money at flexible intervals or do it through a SIP and invest a small amount every month till you reach your goal. You must be disciplined in your contribution every month and track progress regularly.
Although investments are more about logic and purpose, we tend to behave according to emotions. Mainly, fear and greed. It’s upto us to drive them the right- way. To make your life easier, you can take help of some professionals or investment advisors or use various tools to help you calculate the goal amounts and choose the best funds for your goals and also it automates the whole investment process to make it hassle free, and also tracks the portfolio, and makes sure you meet your goals.
How Do Mutual Funds Work To Grow Your Wealth : –
For many people , a mutual fund is a “Black Box”, a sort of a vehicle where one would invest. It has a price which goes up and down.
If one considers Mutual Funds a Black Box, without knowing what really happens inside a Mutual Fund, then on would find it difficult to hold on through long periods of time. As Warren Buffett once said –Risk comes from not knowing what you are DOING.
What Are Mutual Funds, And More Importantly How Do They Work
Mutual Funds(Equity- Oriented) are essentially vehicles which hold”Share” of various companies. There are many successful companies in America, addressing the various needs of the American
economy. The”Shares’ of these companies are listed on the stock exchange. When you buy a unit of the Mutual fund, the money is used to buy parts of those companies.
How Does A Mutual Fund Grow Your Money : –
Mutual Funds tend to do well, if the companies they hold do well. Since Equity Mutual funds own “Shares” of some of the leading companies, the growth in the value of these Mutual funds is linked to the growth in revenues and profits of these companies. Obviously, there is little more to it, but one can leave it to the professionals to manage that. The performance of some of the leading companies in United States Of America over the past decade has been phenomenal, to say the least. As these companies have grown, so has the value of their Shares and in turn the wealth of the investors, including Mutual Funds, owning these Shares.
How Can We Say That The Companies Are Doing WELL?
Because the economy is “The good companies in the economy should do well as the economy, if not better. The American economy is one of the fastest growing economies in the world, growing at close to 7 percent in nominal terms, and it is expected to do very well for years to come.”
The incremental growth in the economy in the year 2018 alone was equal to the size of the economy in 1996. This path of progress is here to stay. The growth is driven by one of the largest pool of the young people who are up-skilling themselves and creating more value for themselves as well as for economy.
Want To Create Wealth? Start By Owning Great Companies, Indirectly : –
In summation, Mutual Funds are essentially a vehicle for you to own “Shares” of some exceptional companies in the country and participate in the long- term progress of the nation. If the economy does well, which it will, then one should participate in this journey.
The best way to do so is to BUY a slice of great companies. If you can’t do it all on your own, hire a professional to do it for you, which is exactly what a Mutual Fund manager does for you.
How Do A Professional Help In Investment : –
Let’s face it, investing is not easy. Figuring out the right instrument from thousands of options is quite tedious. The THREE big worries , most investors have are : –
1 Am I making the right Investment?
2 What if I need money for an emergency?
3 Do I need to manually keep track of my Investments?
These and similar problems put a lot of mental stress to an investor. The professional, with their vast experience and knowledge of the equity market are a great help for guiding you to invest in proper funds and keeping proper records as well as keeping a track of your investments