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28 Years Old, 20k In Hand: Where Should I Invest For 15-20 Years?

Ramalingam

Ramalingam Kalirajan  |8204 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 18, 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
Kunal Question by Kunal on Jul 14, 2024Hindi
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I am 28 years old, after loan and others I have a 20k in hand. I want to invest this amount and I can invest this for upto 15-20 years.

Ans: You are 28 years old and have Rs. 20,000 to invest after paying off your loans and other expenses.

Investment Horizon
Long-Term Goal: You can invest for 15-20 years. This is a good time frame to build substantial wealth.
Growth Potential: Long-term investments can benefit from compounding, leading to significant growth.
Creating a Balanced Investment Plan
A balanced investment plan will help you achieve your financial goals. Here are some key points to consider:

Diversified Investments
Equity Mutual Funds: These funds can provide higher returns over the long term. They invest in a mix of stocks from various sectors.
Debt Funds: These funds offer stability and lower risk. They invest in fixed-income securities like bonds.
Balanced Funds: These funds combine equity and debt, offering a balance of growth and stability.
Systematic Investment Plan (SIP)
Disciplined Investment: Start a SIP to invest a fixed amount regularly. This can be Rs. 5,000 or more per month.
Rupee Cost Averaging: SIPs help average the purchase cost of investments, reducing the impact of market volatility.
Emergency Fund
Safety Net: Maintain an emergency fund equal to 6-12 months of expenses. This ensures financial security in case of unforeseen events.
Liquid Assets: Keep this fund in liquid assets like savings accounts or short-term deposits for easy access.
Retirement Planning
Long-Term Savings: Invest in retirement plans like PPF or EPF. These plans offer tax benefits and long-term growth.
Regular Contributions: Make regular contributions to build a substantial retirement corpus.
Evaluating Investment Options
Equity Mutual Funds: Suitable for long-term growth. They can outperform inflation and provide substantial returns.
Debt Funds: Ideal for stability and lower risk. They offer steady returns and protect your capital.
Balanced Funds: These provide a mix of growth and stability, making them suitable for conservative investors.
Analytical Insights
Investing Rs. 20,000 for 15-20 years can significantly grow your wealth. Here's a detailed analysis:

Investment Horizon: With a long-term horizon, you can take advantage of compounding and market growth.
Diversification: A diversified portfolio reduces risk and optimizes returns. Investing in a mix of equity, debt, and balanced funds is ideal.
Regular Investments: SIPs ensure disciplined investing and benefit from rupee cost averaging. They reduce the impact of market fluctuations.
Key Considerations
Risk Tolerance: Assess your risk tolerance. Equity funds have higher risk but offer higher returns. Debt funds are safer but offer lower returns.
Financial Goals: Align your investments with your financial goals. This includes retirement planning, emergency funds, and long-term wealth creation.
Regular Review: Review your investment portfolio annually. Adjust your investments based on performance and changing goals.
Final Insights
Investing Rs. 20,000 for 15-20 years can help you build significant wealth. Start a SIP in diversified equity and debt mutual funds. Maintain an emergency fund for financial security. Regularly review and adjust your investments to stay aligned with your goals. This disciplined approach ensures steady growth and financial stability.

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.
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Ramalingam

Ramalingam Kalirajan  |8204 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Feb 20, 2024Hindi
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I want to invest for 20 years i can invest with 10000 per month..plz suggest me ..
Ans: Rs. 10,000 per month for 20 years? That's a smart plan!
Looking to invest Rs. 10,000 every month for 20 years? That's a fantastic decision! Here's why:

Long-term investing: A 20-year timeframe allows your money to grow through the power of compounding. This means your returns earn returns on themselves, snowballing your money over time.
But before we dive into specifics, let's consider this:

Financial goals: What are your goals for this investment? Retirement? Child's education? Knowing your goals helps choose the right investment path.
Risk tolerance: Are you comfortable with some ups and downs in the market, or do you prefer a more stable approach?
Here are some general investment options for a 20-year horizon:

Systematic Investment Plan (SIP) in actively managed mutual funds: Regular SIP contributions help build discipline and benefit from rupee-cost averaging. Actively managed funds, unlike index funds, have professional managers aiming to outperform the market.
Actively managed mutual funds offer:

Diversification: Spread your investment across different asset classes like equity (stocks), debt (bonds), and gold to manage risk.
Professional expertise: Fund managers actively research and invest in companies with the potential for growth.
Remember:

Investing is a journey, not a race. Stay invested for the long term to ride out market fluctuations.
Consulting a Certified Financial Planner (CFP) can be helpful. They can create a personalized plan considering your risk tolerance, goals, and overall financial situation.
Next steps:

Define your goals.
Assess your risk tolerance.
Consider consulting a CFP.
Start investing early! The power of compounding works best when you start young.
I hope this helps!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8204 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 02, 2024

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Would like to invest 20L lumpsum for period of next 5 to 7 years
Ans: Investing a lump sum of 20 lakhs for a period of 5 to 7 years requires a careful approach to balance potential returns with risk. Here are some considerations:

Risk Tolerance: Assess your risk tolerance to determine the appropriate allocation between equity and debt investments. For a shorter investment horizon of 5 to 7 years, it's generally advisable to lean towards a more conservative allocation to minimize the impact of market volatility.
Asset Allocation: Consider diversifying your investment across asset classes such as equities, debt, and possibly alternative investments like gold or real estate investment trusts (REITs). This can help spread risk and optimize returns based on market conditions.
Equity Investments: Allocate a portion of your lump sum to equity investments for the potential to generate higher returns over the long term. You may consider investing in diversified equity mutual funds or index funds that track broad market indices.
Debt Investments: Allocate another portion of your lump sum to debt investments for stability and income generation. Options include fixed deposits, debt mutual funds, or government bonds. Choose instruments with a suitable maturity period based on your investment horizon.
Review and Rebalance: Periodically review your investment portfolio and rebalance as needed to ensure it remains aligned with your financial goals and risk tolerance. Adjustments may be necessary based on changing market conditions and your evolving investment objectives.
Consult a Financial Advisor: Consider consulting with a Certified Financial Planner who can provide personalized advice tailored to your financial situation and goals. They can help create a customized investment strategy and provide ongoing guidance to optimize returns while managing risk.
By taking a diversified approach and staying disciplined with your investment strategy, you can work towards achieving your financial objectives over the next 5 to 7 years.

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8204 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 08, 2025

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I am 51 years want to park 10 L recieved from LIC. I have Nippon liquid and Axis Short term funds. Where should I keep this,in these debt fund or some other for max return and least risk . Or some balanced advantage funds?
Ans: Since you're 51 years old and the Rs. 10L is from an LIC maturity, I’ll assess this from a 360-degree perspective with low risk and reasonable return focus.

Let us structure this under simple and clear headings:

Understand the Nature of the Rs. 10L
This is a one-time amount, not a regular income.

So, capital protection is important.

Also, some growth is expected, but not with high risk.

Evaluate Your Existing Funds
Nippon Liquid Fund is very low risk.

Good for short-term parking, like few months.

Returns are around 5.5% to 6% yearly.

You can use it if you need money anytime soon.

Axis Short Term Fund is slightly better return.

Slightly higher risk than liquid fund, but still low.

Returns can be around 6% to 7% yearly.

Suitable if you are okay to stay invested for 2-3 years.

Should You Switch to a Balanced Advantage Fund?
These funds invest in both equity and debt.

They adjust the mix based on market conditions.

They give better return than debt if held for 3-5 years.

But, they carry moderate market risk.

Return range can be 8% to 10% per annum.

Not guaranteed, but historically stable.

Suitable if your risk tolerance is moderate.

Also, you must stay invested for at least 3 years.

What You Can Do Now (Allocation Suggestion)
Here is a simple, low-risk and flexible suggestion:

Rs. 2L in Nippon Liquid Fund: For immediate needs.

Rs. 4L in Axis Short Term Fund: Safe with better return.

Rs. 4L in Balanced Advantage Fund (via MFD with CFP): For better growth.

Choose an actively managed regular plan.

Avoid direct plan. They lack support and monitoring.

Regular plans offer advisor support and rebalancing guidance.

Why Not Direct Plan?
Direct plans look cheaper.

But they don’t guide you during market falls.

Many investors panic and exit early.

This leads to poor returns.

With MFD + CFP support, you stay invested longer.

Long-term behaviour matters more than cost.

Why Not Index Funds?
Index funds blindly follow the market.

No protection during market fall.

No fund manager to adjust strategy.

Active large-cap or balanced funds adapt better.

At your age, protection is more important than chasing index.

Important Tax Point
Debt funds and balanced advantage funds are taxed as per income tax slab.

If you hold for 3+ years, tax is less due to indexation benefit in earlier rules.

But now, for debt funds, tax is same as your slab.

So, choose based on your tax slab also.

But do not let tax alone decide. Safety is first.

Final Insights
Your Rs. 10L should grow slowly and stay safe.

Split into 3 buckets: short-term, mid-term, and medium-risk.

Liquid fund for liquidity.

Short-term debt for capital stability.

Balanced advantage for gentle growth.

This mix gives you flexibility, return and low risk.

Please review once a year with a Certified Financial Planner.

He/she will help you shift the mix if your goal or market changes.

No need to chase high returns. Protect capital, grow steadily.

You already took a right step by asking before investing.

That clarity helps avoid mistakes.

With this structure, your money can stay safe and still grow.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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