Right time to start personal investments

 What most of us lack as investors is the conviction, trust and expectation that our capital invested in equity will expand and deliver possibilities for wealth creation through stocks or equity mutual funds. This is a significant issue that contributes to the washing away of a great opportunity to make our hard-earned cash work for us.

The only option possible to instil the conviction, trust and belief needed to invest in equity-related instruments, preferably by shared means, is to start investing in any household in the month and year in which a child is born. Will parents doubt that, over the next 25 years, their child will develop and not become a self-dependent person? Will they lack faith that in these years, their child will not become a capable person? Don't they make every effort to ensure the development and accomplishment of their child's goals and ambitions? If the response is that all of the said aspects will not be unclear, then one should certainly start investing in the year a child is born.

The investment rising over the future 25 years for an investor (parent) is as valid as the child growing into a responsible adult; yes, there is no question that during this phase of the child growing up at various stages there will be difficult times as parents, but that's very normal and appropriate, isn't it? The investment will also go through such upheavals in a comparable way in these years.

The parents will certainly feel a great sense of accomplishment at the end of 25 years and also achievement in seeing their child develop into a capable individual. What makes us think that it would be a bad idea in these years if they only stayed invested and showed the same courage and perseverance with the investment in equity?

There is no distinction between the growth of the child and the growth of the investment, which often includes patience, perseverance, confidence, and nurturing. In reality, two investments are made, one on the child and one for ourselves, and if we look at 25 years of performance history of such diversified equity mutual funds that have been launched, we would have all the reasons to believe and agree that an investment made through either SIP or lump sum would have yielded returns beyond expectations. The investment would have been very high, just as a child would have grown and become a reliable adult.

In each of India's two oldest private sector mutual fund schemes, Franklin India Blue-chip Fund and Franklin India Prima Fund, a sum of Rs 1,000 invested monthly from December 1993 to August 2018 would have risen to Rs 37.16 lakhs and Rs 80.89 lakhs, respectively. A lump sum of Rs 1 lakh invested in these two funds for the same duration would have caused an investor to accumulate, respectively, Rs 50 lakhs and Rs 95 lakhs. There are many other equity funds, too, that over the long term have been equally fine.

Mutual funds are a basic investment method needing only small sums and targets, the remainder being the magic of the stock market and the force of compounding. As your kids, treat your investment and you will not be disappointed.