My commanding officer ensured that we deposit money in our Defence Services Provident Fund. At that time, it was just about ?50 per month out of my initial salary of ?700. Till today, it is the Provident Fund that we used to save. People are not aware about the Stock Market and Mutual Funds (MFs).
STOCK MARKET INVESTING
We withdraw money from the Provident Fund and put it in Fixed Deposits (FDs). That’s the investment I had until I retired. Subsequently, over time, we started hearing about Shares and the Stock Market. But, the awareness of savings or investments was not very much. So people invest about 75-80% of their money in an FD.
In the nascent stage, we tend to blow up money without thinking about the future. In retrospect, I think, the earlier the savings, better the outcome. People must start investing right from the beginning. With the 7th Pay Commission starting from January, the youngsters must take out a little money and put it in MFs, which will give a lot of returns.
FIXED DEPOSIT AND INFLATION
Your FD returns are taxable, whereas the MF returns are not. This in itself is a big thing. Secondly, the value of money reduces considerably because of inflation. So, your returns are paltry. This is why I took out money from the FDs and put it in MFs.
MF V/S REAL ESTATE
Majority invest in land. But the fact remains is, land requires lakhs of rupees. It is not like an SIP, where you can invest small amounts of ?10,000-20,000. Realty investments are not possible when an officer gets newly commissioned. It is better to invest in MFs with not a high risk. Then he can get a return of 15-20%. Buying land/houses should be at a much later stage.
INVESTING BY YOUNG JAWANS
Compared to all the options i.e. FDs, Real Estate, Metals, etc.; MFs take the cake. Equity Funds are good for the long term. For the short term, there’s always Debt Funds. Plus, it’s not taxable. The risks are average, yes. But then, the returns are quite huge.