Showing posts with label financial freedom. Show all posts
Showing posts with label financial freedom. Show all posts

Sunday, September 4, 2016

What is the Minimum Sum Required to Buy Shares in India?

The amazing beauty of investing in shares is that you can start with ridiculously small amount that is not possible with other classes of assets like real estate and gold. Let us list the benefits:
  1. The unit price or cost or sum required is tiny.
  2. There is no minimum quantity to be purchased (MOQ) stipulation (fractions are not allowed, of course).  One unit or any multiple can be bought.
  3. The transaction costs like taxes, brokerage, and annual maintenance charges are reasonable affordable.
  4. Investments are highly liquid. In case of an emergency one may sell instantly and realize the money within a week.

In India shares of a good number of respectable companies are available for less than Rs.35 ($0.50) apiece.  There are two candidates in our own educational ‘Portfolio 2K15’ itself that meet this criterion:
Less than Rs.50 ($.0.50) Stocks
If we were to think about mutual funds or SIPs one can invest as low as Rs.50. Please also read 'What is the Minimum SIP Subscription Amount and Best SIP?'.

All in all in my opinion one should be able to complete all the necessary things required like opening a trading account, opening a demat) account (account for holding stocks in a dematerialized form) and linking an already existing account with the trading/ demat account for receiving dividends, within Rs.500 to 1000. If you do not have a bank account, you may require another Rs.1000 to 5000 as a minimum deposit or balance as per bank’s norms.

However, for the investments to be meaningful and be able to give you ‘Financial Freedom’ you must consider investing larger amounts, every month, for about forty years. Following picture depicts the net wealth you may expect to accumulate after 40 years when you invest various amounts:

Comparative Investment Results for Various Monthly Investment Sums
In conclusion one can invest in shares for a sum as low as Rs.28 and in SIP Rs.50 and slowly and gradually build a formidable wealth from such humble beginnings.

Sunday, August 28, 2016

How Will My Lifestyle Affect My Children?

Dear Ms.Vibha Verma
Thank you for asking a very valuable question, that has a deep impact both on your life, lives of your immediate family, including your children.
Leading a simple lifestyle, even when you can easily afford a luxurious one, is very important in all respects - financially, philosophically, spiritually and in common sense.
Since I believe in ‘Value Investing’ I will approach your question from the financial management/ investing angle.
Leading a simple lifestyle makes immense common sense. It will leave a lot of cash in your hands, which you can invest to generate ‘Passive Incomes’, which in-turn will lead you to ‘Financial Freedom’ and ultimately to riches and wealth.
By leading a simple lifestyle even when we can afford luxury is teaching a highly valuable lesson to our children, for which they will be thankful to us, the parents, latter in their lives. The urge to splurge is the modern and ubiquitous malady and controlling the ‘Urge to Splurge’ is the remedy.

Comfortable lifestyles is fleeting. Suddenly calamity may strike and cripple a family from maintaining a luxurious lifestyle. I have experienced such a situation myself, when suddenly one day from a rich and powerful stature I was dragged on to the streets without a penny in hand and a family to take care of. From a rich and influential person with powerful friends I became worse than a blade of grass - that is how life can play tricks. Children who are pampered with comforts will be unable face situations like this and that day will curse their parents.
In conclusion, parents have to lead by example living simple lifestyles, which will inculcate the same good habit in the children, for which they will ultimately be thankful to the parents, even though during childhood them may resent the frugal living. Pampering children with goodies and comforts is not right way of showing true love - rather it is spoiling them for which we shall be solely responsible. On the other hand we will be doing immense good to them by leading a simple lifestyle ourselves.

I thank you once again for the valuable question.

With Best Regards

Anand

Please Note: This is almost a reproduction of the question I had answered on the website ‘Quora’, which I thought could be useful to the visitors to this blog site also.