Debt Consolidation Atlanta

Every retail investor wants to put his hard earned money to work to maximum potential. Investing in debt instruments, like fixed deposits or NSCs is what everyone knows about. But the problem is, no debt instruments can give you rock star returns. Inflation, aka "Rising costs" eat up most of the interest benefits that you get from these investments. Typically, interest rates on FDs, NSCs and other schemes are 6 to 8% and same is the rate of inflation.

So, if you want to have non linear returns from your money, shares aka stocks is the only long term way that has delivered returns to WISE investors over the years. The term wise is very important here, as the difference between returns received by the best and the worst investors are as different as the sky and the earth. Here are some points to ponder:

The BSE sensex, which is comprised of 30 top shares of BSE, has grown by around 16% per anum over last 10 years or so. Investing in index insulates you from the risks involved in picking 1 or 2 stocks, but also caps the upside. But the fact is, 16% is a fantastic return against 7 or 8% that you get in FDs. Can't believe me? Just do the math to find out the difference between the amounts that you get for these 2 percentages by some online interest calculator.

Also don't forget the dividend yield that you get. It is a nice bonus that you can use to reinvest your money.

3. Picking winners - If you had bought Bharti Airtel (BOM:532454) around 10 years ago, it was trading at around 12-15 Rs. after adjusting for splits. It now trades at around 300 Rs. level. So your sum of 1,00,000 Rs. would be around 20-25 Lakhs today!

4. Picking losers - There is of course a risk factor to equity. For example, if you had bought DLF in early 2008, it was trading at around 1000 Rs. and now it languishes at around 300 Rs now, after 2.5 years. So your sum of 100,000 would have become a measly 30,000 Rs! In the same period, a 7% FD would give you a relatively healthy total return of around 1,18,000 Rs.

5. Mutual funds are considered a relatively safer bet than directly burning your hands in equity. It is true, to some extent. Some of the best performing equity mutual funds have given average 20-25% returns per anum over last 3 years (e.g. Reliance Growth Fund), whereas some have even given negative returns.

The truth is, whatever the marketers may tell you, that a lot of people make wrong decisions in markets, and lose money. Only a handful of companies become "blue chips" over the long term, and the choice of what you buy matters a lot.

My advice to people who like to make their own decisions, and not rely on mutual funds, is to invest only in companies they understand. If you are from an IT background, you can understand the basics of IT business, and understand what they are talking about in their annual reports.

If you are looking to invest in mutual funds, research their historical returns. Also try to have different kinds of funds in your portfolio. Just like stocks, mutual funds that hold these stocks carry similar risks and rewards.

Debt Consolidation Atlanta

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Debt Consolidation Atlanta: Atlanta debt consolidation

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