From low earnings in the initial phase of our careers to higher expenses post marriage, the reasons are many that we fall back on. What little we save often ends up either in just the savings account or at best an FD even for years together.
2/10
We do end up getting our collective acts together later on when concerns for our childs future or a drying up job market force us to think seriously about investing But is there a cost to investing later on in life, rather than earlier?
Let’s let the numbers do the talking
3/10
The SIP is bumped up by 10% each year in all cases with annualized return of 12%.
Someone starting in their 40s with a SIP 5x greater than the 25-year-old and retiring at the same time will have a corpus of Rs 4.65 Cr. That’s about Rs 3.23 Cr less.
4/10
Let’s list down what it tells us.
#1. At 25 investing with just a Rs 5k SIP will accumulate Rs 7.9 Cr
#2. Someone starting in their 40s with a SIP 5x greater than the 25-year-old and retiring at the same time will have a corpus of Rs 4.65 Cr. That’s about Rs 3.23 Cr less
5/10
#3. Delaying investing by 5 years in the case of the 30-year-old has meant a corpus 1.5 Cr smaller.
#4. In the case of an early retirement, only the 25 and 30-year-old investors will have a significant enough portfolio.
6/10
There’s a late fine
The numbers tell us that there are very real consequences to delaying investing. If you have just 10 years less to save for retirement you’d have to start with at least a Rs 20,000 SIP to match the corpus of someone starting at 25 with Rs 5k each month
7/10
The more you delay, the less time you have to compound your investments. Reaching an inflation adjusted corpus that is cost efficient in terms of the actual investment from your side depends a lot on the time you give your investments.
8/10
The inference is clear. Delaying investing costs real money that can’t simply be made up by investing marginally more. You’d have to invest a lot more to match someone who started early. This means greater pressure on your savings to meet the same financial goals.
9/10
So the next time, you consider delaying your investment decision, ask yourself – “Can I afford paying a late fine?”
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10/10
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The richest and best traders in the world aren’t trading their own accounts to pay the weekly grocery bill and monthly rent they are managing billions of dollars to grow their clients capital over the long term.
The best traders in the world are under pressure not only to make money every month but also must keep their clients satisfied with their performance.
These top traders not only have to beat the market returns but trade in markets with enough liquidity to execute.
2/12
These traders are in the major leagues of the markets and are rewarded for it. Maximum pressure, big trading size, and clients that demand results monthly and yearly. They are also entrepreneurs as they run firms and manage employees.
Trading for a living is a professional endeavor like any other. It requires a large amount of capital to go full time like other business & the returns are irregular much like being a commissioned sales person.
It is less about trading from a lap top on the beach with a Lamborghini in the garage and more about taking on the risk, managing the uncertainty along with the stress and being rewarded for good trades.
There is no regular paycheck, there are losing weeks, months & years.
2/9
1. You have to purchase medical insurance as you have no employer plan
2. You will be your own boss so you have to make yourself do the needed work of research, screen time, and trading
3. The lower your living expenses are the less you need to make to trade for a living.
3/9
Losses is a part and parcel of trading. The trick here is to be able to limit your losses and find the appropriate money managing strategies to suit a situation.
2/10
Money management not a guarantee of sure fire success and high profits but is an assurance against mounting losses in a difficult market. At the same time you need to keep an eye on the volatility of the stock and how much money needs to be put at risk on any one position
You shouldn’t be concerned about portfolio returns every now and then. Of course you have to check at some times, But looking at your portfolio returns too often can be detrimental too.
In a market crisis, negative news causes anxiety and fear. In such times looking at the falling value of your portfolio can only add to that anxiety.
The opposite happens when the market is rallying; you feel like you have made all the right choices.
2/6
You can’t really compare the portfolio return to your return objective on a daily basis, because your goal is likely to be unchanged for a while. Hence, a daily comparison says nothing about whether your portfolio will be able to achieve what it has been set to do.
3/6