Money Matters – I

What can a bunch of reasonably intelligent people do when they meet apart from Gossiping and having fun with their friends ?

May be it is the time to discuss some serious issues and take some advise from our fellow MBA brainiacs and others who are literates if not graduates in Finance.

We have reasonable pay scales to save enough money Say at least one lakh per annum and its already one and half year after we have graduated. I assume that everyone wants to maximize their returns on their savings. Lets start a discussion on how to march ahead to maximize profits and minimize risks. Here is my two cents.

Here are some ways to invest and my analysis on what to choose and why.

Real Estate :

This industry so far have abnormally high returns like doubling rates every year for calculations its 100%pa returns. However investing in realestate may not be a good idea.

1. This industry is now seeing a downward trend so wait and see might be a best strategy
2. Amount involved are Very high and time for returns is also Huge like number of payments are huge for our savings and hence take longer time.
3. Apparently Political risks are also involved occupying lands is not a easy problem to wrestle with.

I presume that this will no longer give Super returns but is still a feasible option if you cannot follow other advises.

Save in Banks:

Returns 10%pa. Some calculations to show how this will develop the money we invest now. Assuming you invested 1,00,000

1:110000.000000
2:121000.000000
3:133100.000000
4:146410.000000
5:161051.000000
6:177156.100000
7:194871.710000
8:214358.881000
9:235794.769100
10:259374.246010
11:285311.670611
12:313842.837672
13:345227.121439
14:379749.833583
15:417724.816942
16:459497.298636
17:505447.028499
18:555991.731349
19:611590.904484
20:672749.994933
21:740024.994426
22:814027.493868
23:895430.243255
24:984973.267581
25:1083470.594339

So After 25 years you will get 10,83,470 rupees for 1,00,000

Save in Mutual Funds:

Returns 12%pa – 18%pa. Lets take 15%pa for average. Some calculations to show how this will develop the money we invest now. Assuming you invested 1,00,000

1:115000.000000
2:132250.000000
3:152087.500000
4:174900.625000
5:201135.718750
6:231306.076562
7:266001.988047
8:305902.286254
9:351787.629192
10:404555.773571
11:465239.139606
12:535025.010547
13:615278.762129
14:707570.576449
15:813706.162916
16:935762.087354
17:1076126.400457
18:1237545.360525
19:1423177.164604
20:1636653.739295
21:1882151.800189
22:2164474.570217
23:2489145.755750
24:2862517.619112
25:3291895.261979
So After 25 years you will get 32,91,895 rupees for 1,00,000 .. ie .., 32 Lakhs.

Save in Equity Funds:

Most of the funds assure you Returns at 30%pa..if you put money atleast for 5 years. I Remember reading else where that If you just invest in Indexed Shares you can get 30%pa returns[keep the money atleast for 5 years] This is a theory and people who wrote this got Noble prize too . Some one please clarify this.

Some calculations to show how this will develop the money we invest now. Assuming you invested 1,00,000

1:130000.000000
2:169000.000000
3:219700.000000
4:285610.000000
5:371293.000000
6:482680.900000
7:627485.170000
8:815730.721000
9:1060449.937300
10:1378584.918490
11:1792160.394037
12:2329808.512248
13:3028751.065923
14:3937376.385699
15:5118589.301409
16:6654166.091832
17:8650415.919381
18:11245540.695196
19:14619202.903754
20:19004963.774881
21:24706452.907345
22:32118388.779549
23:41753905.413413
24:54280077.037437
25:70564100.148668

So After 25 years you will get 7,05,64,100 rupees for 1,00,000 .. ie .., 7 Crore 5 Lakhs for one lakh. What is more interesting is at the end of 26th year this will be

26:9,17,33,330.193269
27:11,92,53,329.251249
28:15,50,29,328.026624
29:20,15,38,126.434611
30:26,19,99,564.364995
31:34,05,99,433.674493
32:44,27,79,263.776841
33:57,56,13,042.909894
34:74,82,96,955.782862
35:97,27,86,042.517720
36:126,46,21,855.273036
37:164,40,08,411.854947
38:213,72,10,935.411431
39:277,83,74,216.034861

At the end of 39years ie…,When you are 65 Retirement Age this one lakh will be 277 Crores.

Comments and Criticism and Follow ups Invited.

—————————-
Saikrishna
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Wonderfull !!!!

I donno who did this, but its wonderful, thanks everyone, now lets kep our spirits high, and blog our way to glory !!!

Wish everyone to sign off each post and each comment with their name, we do not need anonymity as far as I see. So pls stick to these policies. And as far as the id and the password are concerned, you would receive the mail shortly !!!

 Thanks yet again, now lets get the ball rollin !!!

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