Don’t fall for investment gimmicks, FDs, stocks and mutual funds are NOT the best investments

Don’t fall for investment gimmicks, FDs, stocks and mutual funds are NOT the best investments, they provide you the least returns.

The best returns you get is when you invest in yourself, i.e your health, education, self-improvement etc.

Lets take an example to understand.

Lets assume you have a budget of INR 4,000 every month, or an annual budget of INR 48,000.

You have two choices, either you can invest in stocks, FD or mutual funds or you can invest on yourself, in terms of health or getting a new skill or certification.

Lets analyse both scenarios:

1. Investing in an FD:

As you may see, upon investing in a FD after investing 48,000 you will get a mere annual return of just INR 3,247.

2. Investing in mutual funds:

Let’s assume you invest the same sum of INR 48,000 in a mutual fund for 3 years. Lets also assume the ROI to be 15%.

This is what you get:

A mere return of INR 25,000 after investing for 3 Years! That translates to less than INR 9,000 every year.

Now lets take the alternate route, lets invest in ourselves:

1. Health:

Lets say you pay INR 1,000 for a gym membership every month and spend another INR 3,000 on a decent diet. You do this for a year.

Although the direct monetary benefits you would get form this would be zero but there are tons of indirect benefits to it.

You would feel much happier and light.

You would be more productive with your work.

You would significantly reduce the risk of getting diabetes when you get older.

Would you prefer getting the above benefits or would you invest 48,000 to just get a mere return of around INR 3,500 annually?

2. Education:

With 48,000 to invest you can get some technical certifications related to your domain which may get you a new job. If you currently work somewhere, such certifications can even get your promoted and get you a higher salary. With such amount you can buy almost every good book from your domain.

Assuming you are currently a student with no marketable skills and getting a certification gave you a job which pays you INR 3,00,000 annually, that’s a whopping return of 625%.

Assuming you are a working employee and currently make INR 6,00,000 annually, even if the certification helped you get a better job with 30% hike, that is a return of 1.8 Lacs annually. Which is a return of 375%.

3. Equipment which enhances productivity:

Assuming you are a freelancer and if you work with computers, upgrading your equipment can be your best bet. Like for example, using dual monitors can improve your productivity by 20–30%. A average person can save up to 1.5 hours every day.

If a freelancer charges $10 an hour, that translates to $15 a day or 200 working days X $15 = $3,000 a year or INR 2 lacs annually on a monitor that costs just 15,000.

Conclusion:

While these were just mere examples, there are a lot of ways you can get the most return for your investment by investing into your own self.

Stocks, bonds and FDs are great but they are good to invest the surplus amount. If you have lots of money lying around then you may surely invest in them.

You should prioritize investing in yourself first to get the maximum return before directly jumping into stocks, FD or MFs.

This advice specifically applies to young people as they have less capital to work with and yet can invest in things like health,education and experiences which might prove a lot more beneficial in the long run.

When you invest in yourself, you grow. When you invest in FDs,MFs the corporate companies grow and they just pay you the bare minimum.

Hence its up to you to decide who’s growth you want to invest into. 

-Saurav Sharma