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26-Year-Old Soon-to-Be-Married Woman Asks: 'How to Invest My 20 Lakh Rupees for Maximum Growth and Returns?'

Ramalingam Kalirajan |7367 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Jun 25, 2024Hindi

I have 20 lakhs of funds in my bank account....I am 26 years of age....getting married in 4 months.... I want to invest this amount so that it grows and give nice returns

Ans: You are getting married in four months. It is an exciting time. You also have Rs. 20 lakhs to invest. This amount can be used to secure your future. It can also help you achieve your financial goals.

Short-Term Needs
First, consider your short-term needs. You may have wedding expenses. You might need an emergency fund. It is essential to keep some money aside for these needs.

Emergency Fund
An emergency fund is crucial. It should cover six months of expenses. This fund should be in a liquid investment. Examples include savings accounts and fixed deposits. This will ensure you have easy access to funds when needed.

Diversified Portfolio
A diversified portfolio reduces risk. It also maximizes returns. Allocate your funds across various assets. Here are some options:

Mutual Funds
Mutual funds are a great investment. They offer diversification. Actively managed funds are preferable. They are managed by experienced fund managers. This can provide better returns compared to index funds.

Debt Funds
Debt funds are safer than equity funds. They provide steady returns. They are ideal for short to medium-term goals. Examples include corporate bond funds and short-term debt funds.

Equity Funds
Equity funds offer high returns. They are suitable for long-term goals. They invest in stocks of companies. Examples include large-cap and multi-cap funds. These funds are managed by experts. They can help you grow your wealth.

Regular Monitoring
Investments need regular monitoring. Keep track of your portfolio. Make adjustments as needed. This will ensure your investments are aligned with your goals.

Avoiding Common Pitfalls
Avoid Direct Funds
Direct funds seem appealing. They have lower expense ratios. However, they require more effort. You need to choose and manage your investments. This can be risky without proper knowledge. It is better to invest through a certified financial planner (CFP). They can provide professional advice.

Avoid Index Funds
Index funds have lower fees. But they also offer average returns. They follow the market index. Actively managed funds can outperform the market. They are managed by experts. They offer higher returns.

Tax Planning
Tax planning is crucial. It helps you save money. Invest in tax-saving instruments. Examples include ELSS (Equity Linked Savings Scheme). They offer tax benefits under Section 80C. This can help you save on taxes and grow your wealth.

Retirement Planning
It is never too early to plan for retirement. Start investing in retirement funds. This will ensure a comfortable future. Examples include National Pension Scheme (NPS). They offer good returns and tax benefits.

Professional Guidance
A certified financial planner can provide professional advice. They can help you create a personalized investment plan. They consider your financial goals and risk tolerance. They also help you make informed decisions.

Final Insights
Investing Rs. 20 lakhs wisely can secure your future. Start with an emergency fund. Diversify your portfolio. Choose mutual funds, debt funds, and equity funds. Avoid direct and index funds. Focus on tax and retirement planning. Regularly monitor your investments. Seek guidance from a certified financial planner.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.