The Concept & Advice on Earning Regular Returns

By September 1, 2012 October 7th, 2014 Blog

Mr. Gerard Colaco: The first purpose, for which people may invest, is for emergency funding and/or the parking of funds.The second purpose for which people invest is to earn regular returns.

When we talk of regular returns for resident Indians, we generally speak of avenues such as:

-Bank fixed deposits
– Post Office Monthly Income Scheme
– 8% taxable Government of India Savings Bonds
– 9% Senior Citizens’ Savings Scheme
– Public Provident Fund
– Post Office Time Deposits,
– Intermediate-term fixed maturity plans of mutual funds; and
– Arbitrage Funds.

Future returns on debt investments are virtually impossible to predict, either in the short-run or the long-run. At certain times, certain regular returns avenues may appear attractive. At other times, there will be other avenues in this category that will come into the limelight.

One must worry about regular returns avenues of investment only at the time the person requires to actually make investments for regular returns. It is no use trying to arrive at the best options in advance.

The major mistake that investors make is that they invest in such regular returns avenues at a time when they are working and earning regular incomes from their employment or business or profession. When an investor is earning regular income because of his ability to work and earn such income, the last thing he should do is to invest current savings in further regular returns avenues of investment. All savings during an individual’s productive years should go only into growth avenues of investment.This is because the earnings from your employment or business or profession are themselves regular earnings, so no purpose is served by investment in further regular returns avenues.

When you are working, you must take adequate insurance, establish an emergency fund and start a retirement fund. Further savings should be mainly in growth avenues of investment. Simultaneously of course, steps should be taken to acquire a house if you have not done so already, or are not likely to inherit one.

It is only when one is approaching the age of retirement that growth investments should be liquidated to the extent that they can be invested in regular returns avenues for providing a steady stream of regular return to take care of normal living expenses.

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