Meet The Avengers of Wealth Creation

The last month has been all about the Avengers, wanting to watch it first or watch it on the Imax screen. You would second me on the fact that it was next to impossible to get tickets for any show. Weekend or Weekday, Day or Night show, Top or bottom row it was always houseful. The same anxiety carried towards your investments, would do wonders in wealth creation.

These superheroes have populated the Marvel comics for decades. And so the wait for End Game is justified. When asked who is your favourite Marvel character, none of us can settle for just one name. Similarly, when it comes to investing why settle just for one fund? Investments should be similar to Avengers – superheroes in their respective areas. We know one avenger cannot fight against Thanos, but as a team they are unbeatable. Likewise, your investment portfolio should also have a good number of funds, that will help you earn return no matter how the market performs. For all, wealth creation is the single point agenda for investing. It’s only realized in different ways.

Did you know these Avengers (Mutual Funds) help you beat Thanos (Inflation) and earn high returns?

Captain America

Speed and Stamina. Skilled Fighter. Acrobat. Vibranium Shield. Recipient of the Super-Soldier serum, World War II hero Captain America fights for American ideals as one of the world’s mightiest heroes and the leader of the Avengers. He continues his fight in the present as an Avenger and untiring sentinel of liberty. His speed and stamina increased by the Super Solider serum, Captain America is usually the first one leading the way into battle, with few able to keep up with him. He is considered the calmest and composed person who always leads the Avengers to victory. His very nature of strategizing and leading motivated everyone to follow him without too much of a debate. His experience and stability have made him the chosen one to lead the Avengers. Likewise, having that one fund which has proven itself multiple times under various circumstances and market scenarios in your portfolio is very important. Its rightly said, Old is Gold. And having one of the oldest funds in the industry that has evolved as a leader in various market conditions is a good strategy towards wealth creation. The best and oldest fund in the industry currently is Franklin India Prima Fund.

Thor

Summoning Mjolnir. Flight. God of Thunder. Storm breaker and the Bifrost. The son of Odin uses his mighty abilities as the God of Thunder to protect his home Asgard and planet Earth alike. Thor Odinson wields the power of the ancient Asgardians to fight evil throughout the Nine Realms and beyond. Thor’s mighty hammer Mjolnir has immense destructive capabilities and can be summoned to Thor’s hand whenever the god of thunder wishes it. With Mjolnir destroyed, Thor received a new weapon, the axe, Storm Breaker. Like Mjolnir, it can help harness his powers and is capable of opening Bifrost. With so much strength Thor has been able to protect the world. He has proven his worth each time Earth was at war. Similar to the capabilities of Thor, large cap funds will help you build a strong portfolio. Large cap funds invest in top 100 companies. These companies have stayed in the market for really long and have the capability to withstand adverse market conditions. From a wealth creation perspective, these Large Cap Funds are a must have. The best large cap fund that you can invest in is Mirae Asset Large Cap Fund.

Hulk

Superhuman strength. Long distance jumping. Hulk Smash. Durability and Regeneration. Genius Intelligence. Dr Bruce Banner lives a life caught between the soft-spoken scientist he’s always been and the uncontrollable green monster powered by his rage. The Hulk’s strength is immense, allowing him to stop foes even bigger than he is with a single blow, to throw massively heavy objects, and to tear apart metal as though it were paper. I’m sure each one of us secretly admires Hulk’s ability to change forms and wish we could possess such a power. All of us stay glued when its Hulk time waiting for the ‘Hulk Smash’. Dr Bruce is a character with two opposite emotions. Calm and Anger. Hulk gets so angry all the time. But in the End Game movie, he discovers a way to balance both his extreme traits. Even with your investments having a combination fund is necessary. Balanced Funds are exactly like Hulk, they have debt funds that are less risky and equity funds that are aggressive with high risk. ICICI Prudential Equity & Debt Fund is the best Balanced Equity fund, have the fund in your portfolio to help in wealth creation.

Iron Man

Genius. Billionaire. Playboy. Philanthropist. Artificial Intelligence. Armoured Suit. Super Strength and Durability. He just ‘suits up’ and the adventure begins. Iron Man is a character that everyone enjoys because of his comic sense and risk-taking ability. Who wouldn’t agree to the risks taken by him? His high risk taking ability has won thousands of hearts. Every trouble the world faces, he would end up coming out victorious. Similarly, with your investments as well, especially when you are young and have a long term investment perspective, taking risk is healthy. A Small Cap mutual fund is one of the riskiest funds. With an investment horizon of 5 years and more, you can definitely have a small cap fund that would help you earn higher returns. Yes, the higher the risk higher the reward. Hadn’t Iron Man taken such high risks, he wouldn’t have been our most favourite character today. The best small cap fund that you can invest is Reliance Small Cap Fund.

Thanos – Inflation

Enhanced Strength. Master Tactician. Infinity Gauntlet. Using the power of the Infinity Stones, Thanos believes he can ultimately save the universe by wiping out half of its population. Like every story as a villain similar to Thanos in Avengers, for your investments it is Inflation. Similar to Thanos using the power of Infinity Stones to wipe out half the population, Inflation to has a similar effect on your investments. If inflation isn’t under control, all your savings and investments don’t make any sense. It’s just like wiping out your wealth creation goal, similar to Thanos wiping out half the population with just a snap. The first and most important aspect of your investment should be to earn returns over and above the inflation rate. If that’s not the case, then achieving your goals will be next to impossible.

Infinity Stone – Determinants of Inflation

  • Monetary Policy: Inflation is determined by the money supply in the market. If the interest rates are low, borrowing increase and as a result, spending increases. This results in high inflation. To curb inflation, interest rates are increased. As a result, it reduces the borrowing capacity resulting in reduced spending.
  • Currency Rate: Inflation is closely related to interest rates which influence exchange rates. Low-interest rates spur consumer spending which in turn fuels inflation. High-interest rates tend to attract foreign investment which will increase the country’s currency demand. As the demand increases the value of currency increases and the supply for that currency will increase to meet the demand. As a result, when supply exceeds the demand the value of the currency will fall.
  • Fiscal Policy: Controlling demand is essential if inflation is to be controlled. When the aggregate demand is too high, tightening the fiscal policy by reducing government spending is one strategy to control inflation. The government can also increase direct taxes which leads to reduced disposable income.
  • Government Policy: Increasing production, competition and innovation can help maintain the prices lower and reduce inflation. The government may choose to introduce direct controls on public sector wages and on prices of some utilities.
  • Miscellaneous: A pick up in the global demand for crude oil will result in the prices going up, this will impact the cost of production of goods. The price rise will be passed on to the customer resulting in inflation. A bad monsoon would have an impact on agricultural produce. Heavy and untimely rains would spoil the agricultural produce resulting in high demand and low supply. As a result, this would hike the prices resulting in inflation.

Conclusion

Just like Thanos gets his power from the Gauntlet that has all the five infinity stones, the above factors play a vital role in having the country’s inflation rate in check. These factors that influence inflation are not in your control. However, the choice of your investments are. For your investments to earn returns over and above the country’s inflation you need to invest in the right assets. Therefore, let the Avengers (Mutual Funds) in your portfolio help you in wealth creation while taking care of the Thanos (inflation) in your investment story.

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