Mantras for prosperity

No, No. I did not meant to write about mantras if repeated could make us all prosper. I had in mind some basic traits that make some of us more prosperous and others less so.

Buy stuff you need but buy carefully and not often : 

Don’t fall for the sale of the season, because seasons come and go and so will the ‘once in a life time’ sale, in fact once in a life times sales seems to happen every month these days. If you want to buy something badly write down the name of the product,date and the price. See if you still need it few months later if so, fine else, you dont need it. It was earlier tough to spend large amounts of money even if one had it, you had to withdraw cash and give wads of notes to the shopkeeper, it felt bad to spend so much. Now it is easy as first came debit and credit cards, and finally mobile apps. So it is easy to buy a new TV today with a swipe( only 6 EMIs ! ) on the app on the mobile phone which itself was bought using credit card !! So buy but carefully and not often.

Invest, don’t just save taxes :

We love the latest gadgets but stick with savings that was good in our parents generation, not ours. An 8% FD or 8.7% PPF won’t take you far, especially when your expenses rise much faster than 8% p.a. Savings like FD and PPF have a place but they can not be the only things we have. One could also start equity SIPs for 10-15 years for long term goals. Equities get all the bad name (volatile,risky etc)  but deliver good returns while other products have good name( safe, solid )  but deliver hardly any return post taxes and inflation.

Many investors are not aware that there are 80 C tax saving mutual funds too in which one can do a monthly SIP, making it easy to save taxes as the outflow is monthly, the returns could also be much better than PPF etc. Just to give an example PPF investment of 1 Lac made in 2005 would have returned Rs 2.15 after ten years while same 1 lac in a tax saving fund  would have returned Rs. 3.24 Lacs. This excess return of 1.1 Lac is not small, it is equivalent to the initial investment of 1 lac !! The tax saving fund returned 12.5% while PPF returned 8% which created 1 lac wealth with the same tax savings as PPF. Was this return smooth? no, but if you are invested for 10 years what does it matter if the returns were volatile.

So shortly and simply these 2 traits of spending less and investing better is likely to result in prosperity. Wishing you all a happy Diwali.







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