Greed is good

If this caption sound familiar it’s because in the 1987 movie Wall Street, Michael Douglas as Gordon Gekko gave an insightful speech where he said, “Greed, for lack of a better word, is good.” He went on to make the point that greed is a clean drive that “captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.”

This is true in the field of investments also. Unless and until there is greed to earn return on investments one will keep his money in bank account or fixed deposits. There is nothing wrong when you keep your money in a bank which offers you 6%-7% on savings bank account than the one giving mere 4% or when you invest your money in a liquid fund to earn extra return than your bank account or when you invest money in equity market to earn more than liquid fund.

Money is a major facilitator of dreams and would provide the opportunity to do things that you desire to do in your life. Remember, nobody has become rich by earning only salary. You have to create an asset that provides you income even when you are not working and you can’t create an asset unless you have greed for one. The simplest way is to create financial assets by investing in Mutual Funds, deposits, shares etc. Create a financial asset that can fund your holidays, car EMIs, new phone etc, don’t use your salary / business income for them. Business / Salary income should be used only to cover your basic expenses, rest everything should be invested.

Try and build a strong portfolio which can fund for your additional expenses and EMI’s. For example, instead of paying upfront for your home loan, build a portfolio that can generate interest income which is equal to your EMI. This way you will have your investments plus you can buy an asset from the income generated by another asset.

If you are new to investments, start with small and keep your expectations reasonable. Like excess of anything is bad, same is the case with greed also. Although greed can work, it alone can be disastrous. Start small, may be a SIP of 5K, follow asset allocation strategy and expect reasonable return from equity ( 12%-15%). This should be good to start and then you can increase your investment once you are comfortable with the financial products. The mutual fund basket provides with products where you can invest for as low as 7 days to as high as 15-20 years with complete liquidity unlike insurance products. Always remember, its never too late to start.

“Money is always eager and ready to work for anyone who is ready to employ it.”                                                                                                                                   Idowu Koyenikan