Lachhuka Insights

Dated 01.01.2026

 

General

It has been observed that Equity has given better return over a longer period of time. BSE Sensex has moved from 100 in 1980 (base year) to around 85000 now. NIFTY 50 has moved from 1000 in 1995 (base year) to around 26000 today. If we see Mutual Funds, HDFC Flex cap launched in 1995 at Rs. 10 is more than Rs. 2000 today.

But the Equity Market is volatile and there are periods of negative returns too.

As our goal is to accumulate funds to meet certain objectives, we will discuss only SIPs (Systematic Investment Plans) similar to Bank Recurring Deposits.

It is therefore important to identify the timespan required to meet the goal. Care must be taken to keep emergency funds in debt or liquid funds, especially the ones having no exit load.

If the investor has no enough corpus in hand for emergency funds, it is advisable to park a part of monthly savings in bank recurring deposit or SIP in liquid fund to create the corpus.

After meeting all these emergency needs, everyone has to save something for the retirement or even the goals like higher education.

There is no same set one rule for all. Different people have different needs.

Some people have ancestral house and there is no need to buy one.

Some people have pension income with some having it inflation adjusted one.

There are some, whose medical expenses are covered lifelong by the employer.

Some pensioners have to support their children after retirement, while some people can depend on their children.

Some may have forced retirement savings by way of PF and Gratuity entitlement, while some may not have the same luxury like Gig workers, Self-Employed Businessmen and Professionals.

Different situations demand different style of investment.

Whatever be the situation, a portion of savings must go to equity with enough patience to hold.

Returns comparison:

	03.11.1995	31.12.25 (Near figures)	Times (Approx)
HDFC Flexicap	7.88	2050	260
NIFTY 50	1000	26000	26
GOLD	4680	136000	29

 

The above table demonstrate that even the passive fund like NIFTY 50 (which is almost static for a year) almost matches with returns in Gold (which is more than 50% up in a year), while actively managed mutual fund outsmarts substantially.

There is no other way to accumulate a self-dependent fund.

We should not be shy of taking the help of an expert, if DIY (Do it yourself) is difficult.

Lachhuka Insights

Investment of Savings or funds set apart for future expenses, emergencies, business expansion or to meet uncertainties is important for every entity whether for personal needs or businesses.

As an individual, we need funds for various life-time events like:

1. Admission of Children to School, Admission Fee and Caution Money make it a good sum, specially in early part of your career.

2. Higher education expenses of Children.

3. Buying a House.

4. Buying a Car.

5. Marriage of your children.

6. Completion of important milestones like 25th Anniversary.

7. Retirement Corpus.

Apart from these, we need funds for medical emergencies, drop in income due to service-break, annual vacation, occasional Gifts to spouse and children.

There may be varied and diversified instruments to meet each of your goals. You should not shy of taking the help of an expert, if you find DIY(Do it yourself) difficult.

As a Business, we need funds for:

1. Expansion.

2. Temporary drop in business.

3. Temporary impact in flow of funds due to slower collection or movement of inventory.

4. Need to ensure the uninterrupted supply chain, specially the critical ones.

5. Payment of one-time settlement for employees like Gratuity.

Creating a separate fund from non-cash expenses like Depreciation, Provisions for Gratuity or other expenses is very much important for smooth functioning by timely replacement of fixed assets. Apart from these, some funds should be separated to meet expansion and diversification requirements.

There may be varied and diversified instruments to meet each of your needs. You should not shy of taking the help of an expert, if you find DIY(Do it yourself) difficult.

P.S. Returns, Volatility, Liquidity and Risk is important in deciding the investment instruments.  

For Example, Rs. 10000 on 01.01.2005 invested in SBI Contra Fund is Rs. 3,26,903.35 on 10.10.25, while it would be around Rs. 80,000, if invested in Bank Fixed Deposits during the same period.

But, the risk and volatility is higher in equity specially in shorter period.