MODULE 2

DISCIPLINED INVESTING

Discipline – a word we all hated during our school days when the strict Head Master or Class Teacher used to give lectures on discipline. Once we grew up, we now realise that discipline is required in many things. So also there is a need for discipline in investing.

In simple words, setting aside a certain sum of money regularly for investment can be discipline. Here let us see something called B.M.I.

No it is not Body Mass Index as we have known. I will call it as “Bare Minimum Investment”. This is the most minimum amount one can set aside as investment – come rain or shine. At no point, this can be violated. This B.M.I. will naturally vary from person to person. The amount can vary but the principle should not.

While on this, I can tell you of one of my friends who worked for a Public sector company in a rural place. Her thinking was very simple, she does not know finance, investment philosophy etc. Once the balance in her Savings Bank account crosses Rs. 1 lakh, she will immediately place Rs.1 lakh in Fixed Deposit in the same Bank. No other monitoring of accounts.

I have another friend who is aware of financing etc. His B.M.I. is on every Monday, a certain sum will be transferred to a Mutual Fund, he has given instructions to the Bank. He says this way he can take advantage of market fall to get more units. But the principle is the same: Investing a certain sum regularly.

So Step 1 will be: decide on your B.M.I. And stick to it over years to come.

Step 2 is to implement it. How and where?

Here I will try to segregate into groups various people.

First: People working in Govt / Public Sector companies etc. For you, the facility of Voluntary contribution to Provident Fund is available. Decide on the amount and merely give a letter to your employer to deduct as Voluntary Provident Fund. It is as simple as that. Over a few years, believe me, you will be surprised at the growth of this Voluntary Provident Fund accumulation.

Second : the millennials, the newly joined employees in private companies and senior people working in private companies: For you, it is better to give standing instructions to your Bank to transfer amount to a Recurring Deposit account. Even through online Banking this can be done.(I am aware the returns will not be very fancy but my intention is the B.M.I. should care for safety of principal and no risk to be taken on it). Yes for further available funds, I can suggest other avenues later.

Third : Practising Professionals like doctors, Advocates.  I am aware that most of your fees comes in cash form and I am aware that money is not even deposited into Bank. Doctors particularly being in the life saving profession concentrate on medical advances etc and have no time to invest. However, I will suggest to deposit the money into Bank at least twice a month (finding time for this is difficult though). And give standing instructions to transfer to a Recurring Deposit account. This being B.M.I. no risk to be taken. May be even through Online banking this can be done For surplus funds available, I will be dealing later.