Are you investing enough for future?

Presenting the best of investor education content, #CuratedByKuvera. This video by @HDFC Mutual Fund explains how to use the 50-20-30 rule in investing. 



 Investing lets you create a safer and more stable future. However, the future of your dreams also depends on your investment corpus.


Let’s understand this with an example: Let’s say, at 30, your earn Rs.50000 and invest Rs.6000 per month in Mutual funds through SIPs. And you increase SIP by 10% every year. Your investment corpus of Rs.6.83 lakh is likely to become Rs.9.54 lakh by the time you turn 37. Assuming a 10% interest rate.


Now your goals at 37 might look like these:

-Downpayment for a home loan

-Comfortable upbringing for your child


Do you think your corpus will be enough for the down payment?

Maybe, it depends on the value of the house you intend to purchase. But, now you also simultaneously pay for your child’s school expenses over multiple years.


Do you think your corpus is enough for both goals? No. You would have to choose between your dream house and your child’s future. Not a pretty choice, right? So how do you put yourself in a better situation? By investing enough at each stage.


And how do you know if you are investing enough? It’s simple! Use the 50-20-30 thumb rule. Put 50% of your income in needs, 20% in savings & investments, and the remaining 30% in wants.


So if your monthly income is 20%, invest Rs.10000 in mutual funds scheme. Increase SIP by 10% every year and by the time you turn 37, your corpus of Rs.11.38 lakh will become Rs.15.91 lakh. This will allow you to pay for both goals.


The difference it makes is stark. You would have corpus of Rs.9.54 lakh without 50-20-30 rule and Rs.15.91 lakh corpus with 50-20-30 rule.


To sum it up, the simple way to grow your wealth is by accumulating bigger corpus. Evaluate your corpus today, use the 50-20-30 rule to ensure your are living your best life while investing for a better future.


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