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How should I start investing at 23 with a monthly income of Rs.49,000?

Ramalingam Kalirajan |7097 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 02, 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

Question by Harsh on Jul 28, 2024Hindi

Dear Gurus, I am a 23-year-old with a monthly income of ?49,000. I am keen to initiate an investment strategy, allocating ?6,000 to ?8,000 per month, with a gradual increase over time. I currently possess a fixed deposit of ?50,000. Kindly provide guidance on suitable investment goals and strategies.

Ans: Financial Situation Overview

• Your monthly income of Rs. 49,000 is good for your age.
• Planning to invest Rs. 6,000 to Rs. 8,000 monthly is commendable.
• Having a fixed deposit of Rs. 50,000 shows you're saving.

Investment Goals

• Short-term goals: Build emergency fund (3-6 months of expenses).
• Medium-term goals: Down payment for house, higher education, etc.
• Long-term goals: Retirement planning, wealth creation.

Risk Assessment

• At 23, you can take higher risks for better long-term returns.
• Your risk appetite may be high due to fewer responsibilities.
• Consider aggressive growth-oriented investment options.

Asset Allocation Strategy

• Start with 70-80% in equity and 30-20% in debt.
• Gradually reduce equity exposure as you grow older.
• Review and rebalance your portfolio annually.

Investment Options

• Mutual Funds: Good for long-term wealth creation.
• Public Provident Fund (PPF): For tax-saving and steady returns.
• Employees' Provident Fund (EPF): If available through employer.

Mutual Fund Strategy

• Start with a mix of large-cap and mid-cap funds.
• Consider multi-cap funds for diversification.
• Opt for Systematic Investment Plans (SIPs) for disciplined investing.

Tax-saving Investments

• Equity Linked Saving Schemes (ELSS) for tax benefits.
• PPF contributions also qualify for Section 80C benefits.
• National Pension System (NPS) for additional tax benefits.

Emergency Fund

• Keep 3-6 months of expenses in a separate savings account.
• This fund should be easily accessible in case of emergencies.

Insurance Planning

• Get a term life insurance policy for financial protection.
• Opt for health insurance to cover medical emergencies.

Debt Management

• Avoid taking unnecessary loans or credit card debt.
• If you have any high-interest debts, prioritize paying them off.

Financial Discipline

• Track your expenses and create a monthly budget.
• Gradually increase your investment amount as your income grows.
• Avoid unnecessary expenses and focus on saving more.

Skill Development

• Invest in yourself by learning new skills.
• This can lead to higher income and better career prospects.

Regular Review

• Review your investment portfolio every 6 months.
• Adjust your strategy based on changing goals and market conditions.

Finally

• Your early start in investing is praiseworthy.
• Stay disciplined and consistent with your investments.
• Keep learning about personal finance and investment options.
• Consider consulting a Certified Financial Planner for personalized advice.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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