RBI keeps rates unchanged

Blog meant for 8 June 2017 Thursday

Dear friends,

Nifty traded in a narrow range the entire day today and finally closed 27 points higher after the news from RBI stating that there was no change in interest rates as of now.

A rate cut means that RBI will provide funds to banks at lower rates thereby increasing money flow in the economy as loans become cheaper and individual and companies borrow money for productive uses.

The European markets are all trading negative and the US markets are trading marginally positive.

As per 30 days moving average, Nifty still showing Hold signal.
The indications for short term are as follows:


Wait to Sell – INFOSYS

Wait to Buy – Reliance, SBI

Don’t Buy –  LUPIN, BHEL, ONGC


Today’s Question is –

Question –

Is it better to invest as lumpsum (One time) in Stock Markets for long term or is it better to invest on a monthly basis ? Or is a combination of both good?

Answer – 

The one sentence answer would be lumpsum investment plus monthly investment is the best option.

Suppose, there is a 40 year person who has not invested or saved much money so far in his/her life, then investing any lumpsum amount which he/she may have would be helpful in trying to compensate for the lost years in which he/she did not save or invest.

For example, he/she may invest Rs.2 lakhs lumpsum (one time) into Stock Markets for long term. After this investment, as he/she saves some portion of his monthly income, he/she can invest on a monthly basis too. May be investing Rs.6000/- per month every month for the next 20 years until the age of 60 when he/she may retire. 

Suppose, a person is just starting to earn at the age of 23, then he/she may not have any lumpsum amount to invest but since he/she is starting to save and invest very early in life, a monthly investment of even Rs.2000 is a good amount since the number of years for retirement may be another 37 years or so.

If a 35 year old invests Rs.1 lakh lumpsum and also invests Rs.5000/- per month until the age of 60 years with a conservative returns of 15% p.a., he/she will get around Rs.1.79 crores at the age of 60. Out of Rs.1.79 crores, his investment amount is only Rs.16 lakhs and so Rs.1.63 crores is the capital appreciation (profit).

At 15% pa. returns

If he did not invest a lumspum amount but only invested Rs.5000 on a monthly basis, then he would get only Rs.1.46 crores.
If he invested only lumpsum amount of Rs.1 lakh and did not invest anything on monthly basis, then he would get only Rs.32.91 lakhs

At 20% pa. returns

If a 35 year old invests Rs.1 lakh lumpsum and also invest Rs.5000/- per month until the age of 60 years with a 20% pa returns, he/she may receive Rs.4.35 crores at age 60.

At 20% p.a., if he invested only monthly basis Rs.5000/- , then he would get Rs.3.33 crores at age 60. 

At 20% p.a., if he invested only lumpsum of Rs.1 lakhs and no monthly investments, then he would get Rs.95.39 lakhs at age 60

This example shows the value of even a small amount many years later. Also, a 5% p.a. difference in returns results in huge difference over a long period.

Start investing early for yourself or family and have patience and discipline for long term!

All the best!

Dr.Bharath Chandra

About the author

Dr. Bharath Chandra

Hi there! This is Dr. Bharath Chandra & Rohan, International Trainers & Success Coaches. We have addressed more than a crore people on Stock Market, Personality Development, Wealth Management and Financial Planning over the past 35 years.

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