How to save for a home the smart way, just like Vibhor.

Full disclosure here – Vibhor work with us at Cube Wealth. We’re telling his story because staff or not, we’ve helped him revolutionize his investing. 

Vibhor rocks! He works in technology performing QA. Born in Ambala (Haryana), Vibhor has built a career in Mumbai and plans to stay. 

“I’m married and have a 3-year-old child. Kid recently started school. I didn’t want to switch cities. It might hinder his education. I believe it’s the right time to settle down, buy a house. I have some savings but it’s not adequate to buy an apartment. I am hoping Cube Wealth will help me in accomplishing my objective.”

Investing history pre Cube Wealth

Like so many of us, Vibhor inherited his investment philosophy from his parents. They have a go-to person that is a family policy advisor. They would see him a few times a year.

“Most of the times suggestion from the Family Policy Advisor is related to investment in LIC policies or Post Office Schemes. So I ended up investing in these. If you calculate over the period of time returns on those are low. It will not aid in shaping my future.”

Sound familiar?

LIC Scheme

Post Office Scheme

Returns for your average LIC? 4%. Lower than the 6% rate of inflation. LIC products are not high return investment products. After all, the inherent purpose of an LIC is to provide financial security in the event of a death…

Post Office Schemes have some tax saving benefits associated with section 80C but do not earn great returns at all averaging 6-8%. You need to meet thresholds, there’s long lock-ins and most of the profits are eaten up by inflation. 

The cold hard facts

Vibhor wasn’t going to achieve his goals if he keeps investing the same way. Despite the effort of his parents to set up these investments for him, their dutiful annual contributions and introducing him to the family policy advisor to start his own ‘investments’, Vibhor is no better off than if he’d left his money in a basic bank fixed deposit (not to mention he’d have done a lot less paperwork). 

Vibhor's Cube

Liquid Funds

Mutual Funds - India

Why Liquid Funds for Vibhor?

Get Vibhor earning more on his short term savings that what he is with his bank account so that he’s not losing money to inflation. The maths: Bank account 3% – inflation 6% = -3% loss. The revised equation is much better with Vibhor actually earning Liquid Fund 7% – inflation 6% = 1% profit.  So he’s 4% better off without taking any risk and maintaining flexibility. 

Why Mutual Funds India – Moderate and Aggressive Risk category for Vibhor?

Start earning more returns to build up his home deposit corpus. Under the guidance of independent advisor Wealth First, invest with confidence in the top performing funds for each risk category.  Vibhor is now earning 10-25% compared to 4-8% with his LIC and Post Office Schemes. He also has the option to invest in ELSS Mutual Funds for the tax reduction benefits.

Why did Vibhor join Cube Wealth?

“Cube has multiple flavours of investment in one place with attractive returns which will help me to accomplish goals. It made sense to use advisors that HNIs trust. I always wanted to invest in something better than LIC and Post Office Schemes but don’t have the skills to research the market myself so I went with Cube Wealth because they have picked advisors that consistently get the best returns over time.”

“One of the features that I like most is CubeATM. You can withdraw money at any time. I’m looking forward to investing in debt products which yield more than 12% returns.”

Next steps for Vibhor

“I want to keep growing my portfolio. Even though I started investing during a period of market volatility (sept 2018), I can see there has still been growth that is more than my LIC and Post Office Schemes.

I want to invest in some of the debt assets like TradeCred for the 13% returns. This will give me a solid short term funds portfolio. Then I want to start a SuperSIP for the Equity Advisory to complement the Mutual Funds investment I’ve set up for longer term. I plan to start that in 2020.”

Summary

1. You can do much better than investing in LIC and Post Office Schemes. These can actually cost you money because the low returns are eaten up simply by inflation which is at a higher rate that the returns these products offered.

2. Investing isn’t as scary as you think when you have the right advisors and invest in asset classes that perform. You can access this simply through Cube Wealth.

3. If you have a goal that you want to achieve, let us help you. Just like we’re helping Vibhor. You don’t have to be a Cube Wealth staff member either. 

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