How to financially plan a big fat Indian wedding of your children

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Updated: July 20, 2018 1:14:57 PM

The past trends show that there is a better way to invest in gold rather than just purchasing it physically. Investment through ETFs and index funds reap bigger returns as compared to tangible gold.

Financial Express Wealth CreationBig budget events like marriages take careful planning and right investment choices

Our aspirations today are expanding at the same length as our problems. We feel inspired to go to great lengths to achieve our aspirations. The latest mobile phones, travelling abroad, the biggest cars to having a big fat wedding; we want it all. We can delay other experiences but, one can not postpone this one mega event in one’s life. Life gives only one opportunity to meet this aspiration. It is better to remain financially prepared for this event in order to avoid any disappointment.    

Whether you are planning a destination wedding or otherwise, a wedding may give a hefty dent to your pocket. Traditionally, many people in India start saving in gold. They accumulate metal in the form of ornaments or coins. Mostly because from time immemorial, gold is considered as a safe investment option which would never fail to deliver if things go south or awry.

It may seem prudent to many. However, the past trends show that there is a better way to invest in gold rather than just purchase it physically. Instead of investing in the metal, investment can be done in gold in the form of ETFs (exchange-traded funds) or Government of India’s Sovereign Gold Bonds. The Government Gold Bond Scheme pays interest of 2.5% (payable semi-annually on nominal value). Moreover, the investor does not have to incur any cost at the time of buying or selling as in physical gold. There is no risk of theft also. One does not need worrying about the purity factor associated with the yellow metal too.

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Moreover, equity shall not be overlooked as a tool to create essential wealth. Equity may not seem a prudent choice in the short term for hiccups in the capital market. However, from a long-term perspective, saving and investing in equity is like sowing seeds for a bountiful tomorrow. Equity has historically created wealth for people who believed in the asset class.

For example, the S&P BSE SENSEX, conceived in 1979 had a value of 32969 as on March 31st, 2018. It means that had we invested in a passively managed index with a sum of Rs 100 sometime in the past, it would be Rs 32,969 as of March 31st, 2018. The investment would have grown at the rate of 16 per cent compounded annual growth rate. This is only the returns generated through the passive investment. Actively managed equity funds have delivered higher returns over long time periods.

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Investment through a SIP route is also a viable option for someone to invest in equities. When it comes to tangible gold, we don’t track daily movements. We don’t panic and sell it off because the belief that the piece of yellow is valueless and timeless is ingrained in our brains. Similarly, one should not panic and sell low in times of volatility. The behaviour aspect of growing wealth works in the same way as a tree grows. If you have set aside money for your marriage or your children marriage, then be patient with your investments. Let your investments compound over time and refrain from reacting impulsively. If you have opted for SIPs, then pump up the money there on every occasion and top it up with some more investment.

A wedding gives a setback to a larger part of your savings. It is advisable to build a corpus from early on to cherish and enjoy the precious moments

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