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True financial independence comes not with money, but with knowledge and investment in long term investment plans. A long term investment plan is one that secures investors family from any uncertainties and provides a stalk of financial support at times. Learning the right way to deal with money at every stage – whether earning, protecting, budgeting, saving, spending, leveraging, investing or insuring it, will create sustainable long-term wealth creation. Basically, all the long term plans are to be considered as savings plans.
Perhaps, most of the long term investment plans are such that they assure financial freedom during elderly days of the life. Having an alignment between ones financial goals and their investment plan would only ensure a continuous and steady income at a later time and make best out of the present outflows and also the investor should periodically keep reviewing and refining portfolio allocation with changing financial goals. All the long term plans are crafted to meet the specific set of needs of its clients – be it an investment for higher studies, children marriage, building home or compensating medical issues at a later part of life. This paper focuses on such long term plans which would safeguard the investors’ future either by assisting at uncertainties or by providing a flow of income.
Keywords:Financial independence, Long term investment plans, Sustainable long-term wealth creation
Generally when an investment is done for a period of more than 5-6 years or even more than 10-15 years, it is called as long term investment. Basically all the long term investment plans are intended to secure your future and becomes handy at any lateral part of life. Though there is good number of short term investment plans which can also be handy, long term investments are on their merit due to their ability to create more returns over short term investments. Here such long term investment options in India are described by which one can smartly diversify their investment portfolio & grow their money further. Having an alignment between ones financial goals and their investment plan would only ensure a continuous and steady income at a later time and make best out of the present outflows and also the investor should periodically keep reviewing and refining portfolio allocation with changing financial goals. To diversify the investment portfolio risk is to distributed in various stocks, mutual funds, bonds & debentures and other different instruments. Investor should never invest more than 10% in any of the investment plan of the portfolio and can remain protected if any of the above options collapse.
The best long term investments all share similar characteristics. They
When someone starts saving money for his/her child’s education expenses, marriage etc. that come under long term investment. One can choose from a wide range of such investment products as per risk bearing capacity. Being a long term investor one has its own cons, as these types of investments need huge commitment & patience. Before opting for the long term investment options one should always set aside certain amount for some urgent crisis which may bring any type of financial obstacle.
In long term of more than 10-15 years, the return will be definitely good. In case of the Gold Deposit Scheme the investor can deposit / invest minimum of 200 gm gold in exchange for gold bonds. The bond will hold a tariff free interest rate of 3% – 4% with a lock in period of 3 to 7 years. Gold bonds are not entitled to any kind of capital gains or tax and wealth tariff. According to the investor’s preference, the insured amount can be accrued back in terms of cash or gold.
A lot of investors make the mistake of abandoning their financial plans at the first sign of bad news. Instead, one would do well to take a macro perspective and realize that over the years, bull markets have lasted longer than bear markets. It is also interesting to note that on most occasions, the upward rallies have easily made up for short-term declines.
Selective thinking is a common, dangerous illusion that blocks the flow of all relevant information required for making the right financial decision. Investors should not look for the ways to get rich quickly, instead work on a systematic plan to protect, preserve and growwealth. Sustenance and long-term wealth accumulation is a boring, mechanical process called Asset allocation. The broader asset group of equities, bonds, commodities etc will lead the investor to the gateway of long-term wealth creation and sustenance. Dynamically managed mutual fund is one of the best investment vehicles for retail investors looking to gain from long-term investments. An Asset Management Company offers various schemes that pursue different objectives. These schemes are actively managed by experienced fund managers who follow a well-defined investment style and proven processes.
Systematic Investment Plan is the best mode of long-term investment for a retail investor. An SIP allows the investor to make the most of a bearish market as one can gain from rupee cost averaging. It is all about the Mindset-Staying invested and periodically reviewing your financial plan has proven to be one of the surest ways of creating long-term wealth. When investing in uncertain times, following the basics is the best way forward. When the outlook is pessimistic, it is natural to be worried about the ones hard-earned money. Wharton professor Jeremy Siegel once said, “Volatility scares enough people out of the market to generate superior returns for those who stay in!” Many will ignore that advice. However, the fact about the market is that it is impossible to predict when a bull market will begin. If you stay invested, you never miss the party and usually reap good returns. It is better than missing out by waiting on the sidelines.
India being one of the fast growing economies across the world, thrust for long term investments is also on raise. In the wave of quest for long term investments the contribution by Indian individual and institutional investors are also taking their turns. While the institutional investments are of considerable amounts since the beginning, the individual investors also moving forward to follow the suit of IIs(Institutional Investors). There are wide number of long term capital instruments which would allow both Individual and Institutional investors to enter the capital markets, the most prominent and growing channel of investment is through private equity investments. The private equity investments are topping the list of prioritized instruments due to their high risk and return paradigms. The growing awareness of the public on equity investments and their economies of scale are the reason behind an increase in the amount of private equity investments over last decade. Perhaps, it is the investor’s novel thinking that also benefiting the bucket of individual equity investments in India. The figures below would depict the overall volume of Private Equity Deal in India since 2006.
This is an exemplification of how the Indian long capital markets are responding to the corresponding requirements of Indian as well as global markets. The funds raised and the number of deals that took place during 2006-2016 equity alone would show up the future prospectus of the India as a hub for more number of long term investments. The Year to date (YTD) funds raised through equity are also increasing year by year, following the suit the year 2016 will also add up to the PE basket of India. Though there are certain lows during the decade every time India rebounded with its irrevocable confidence levels. Apart from the returns perspective, the long term investments also protect the investors from certain tax liabilities and reduce the tax burden for both institutional and individual investors. As a whole, the Indian long term investments would provide required returns at minimum possible risk by protecting investor’s interests.
Knowledge about Behavior Finance, Crowd Psychology, and Socio-economic factors will help an individual become a better investor as well as a better human being. Major losses to investors can come from purchase of low-quality securities at times of favorable business conditions. Equities might be volatile in the short-term but provide higher returns with much less risk over the long-term. Though past performance of any product is not always a guarantee for their future performance it is advised to buy any investment product which has a good track record over last few years and which charges low management fees. The behavior of Indian financial markets towards growth trajectories and its progressive responsiveness to global markets raised confidence in Indian investors and also attracting many foreign individual and institutional investors towards India. With this paradigm of growth and projections of growth we can definitely say India would become an hub of investments sooner or later. The projections of International associations also depict India as an attractive investment.
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