#GetMoneywise – Don’t play too safe with your money, look at ways to invest smartly

Most of us put off investing when we start working because the impression is you need a lot of money to do that. That’s not true, You can start with as little as Rs 500- 1,000 a month. What is needed to grow your money is good, steady, and consistent habits like putting away a certain amount every month so that going ahead you are stronger, financially. You may miss small amounts of money now and then but in the long run you will thank yourself.

Another notion about investing that many people have is that it’s risky but a lot of this is self-created. What investing does in grow your money faster.

“They should start investing as soon as possible when they start earning, may be from the first salary itself as this will add immense value to their investment, says Rahul Kelapure, a manager in the Enforcement Directorate at the Securities and Exchange Board of India (SEBI). Kelapure has held over 25 workshops in investment education for people with disabilities in the last four years. This small amount, he adds, will pay off in the future. “They can build a good corpus over a period of time and it would not weigh heavy on their pocket while investing.

Tips to consider

So, what do you do to make your money grow, that’s the next question?

One of the tendencies common to people with disabilities observes Amar Jain, a corporate lawyer based in Mumbai, is to be conservative. ‘We are told about Public Provident Fund (PPF), LIC and FDs and we go with that mindset and never think of the fourth option, says Jain.

Jain, who is visually impaired, got involved in planning his money at a rather young age, thanks to his parents. The fourth option he talks about is where the opportunity to compound your money really lies, which is not explore enough.

“The appetite to invest in mutual funds or Equity Linked Savings Schemes or non-convertible debentures is not much as we go by what people tell us, he adds. “People also tend to invest in assets that do not generate good returns and opt for safe options alone, like gold.

“Consider asset class like equities to accumulate wealth in the long term, advises Jitendra Solanki, a financial planner who focuses on families of kids with disabilities. “People with disabilities with their unique requirements tend to rely more on fixed income instruments. Like it is said – “Not taking any risk is the bigger risk for your investments”.

The mistake most of us, disabled or not, make is to think of financial instruments as means to save taxes. As a result, we are unaware of the heads under which we are taxed, or those under which we can save tax like the National Pension System or schemes for the girl child.

So, how do we get it right? We put this question to the experts.

“One should choose the product depending the timeframe and risk taking ability of the person, advises Kelapure. “When you are young, you could look at a little higher risk product as that would give high returns. As one ages, reduce the risk from the portfolio. Review your portfolio every six months and opting for life insurance (term insurance only) is important along with a good medical insurance cover.

Solanki says whatever the stage, it is a good idea to start a SIP in equity mutual funds so your investments can beat inflation. He also advises a look at risk-averse investments in mutual funds.

Target long term wealth accumulation from this which can cater to later years of living expenses. Secondly, there are risk-averse investments even in mutual funds. My view is to keep a mix of mutual funds, PPF, fixed deposits, and bonds to help create an efficient portfolio. Avoid falling into emotional traps and investing in insurance policies where a mix of insurance and investments is offered. Most importantly, factor in inflation and taxes whenever you invest. Since there are no specific investments options available for people with disabilities, it is wiser to strategize and then invest. – Jitendra Solanki, Financial Planner

The options for growing your money are many and it’s high time that people with disabilities start making their own decisions and informed ones.

“People with disabilities do not think of being financially independent or financially sound, says Jain. “Many of us think we have a decent house, a decent salary and pension after retirement for our house runs smoothly. It’s time we go beyond that typical mindset.

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