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

Ans: Hi Viditha, Can you please help me to understand what will be your period of investment and what is the goal behind this investment?

Ans: With your substantial savings and clear goals, you're in a good position to craft a comprehensive investment strategy. Let's delve into a tailored approach.

For securing 1 crore INR for your daughter's future, a mix of moderate to low-risk investments could be ideal. Consider diversified mutual funds, fixed deposits, and possibly some portion in government schemes like PPF or Sukanya Samriddhi Yojana for her education fund. These avenues offer stability and reasonable returns over the long term.

To generate a monthly income of 85,000 INR, we need to focus on income-generating assets.Equity funds can indeed play a significant role in your investment strategy, especially for capital growth. Given your preference for equity, let's adjust the allocation accordingly.

For high-risk investments, you might consider allocating a substantial portion to diversified equity funds or sector-specific equity funds. These have the potential for higher returns over the long term but come with higher volatility.

In the medium-risk category, you can continue to diversify with a mix of balanced funds, which invest in a combination of equities and debt instruments. These can offer a balance between growth and stability.

For moderate-risk investments, you could include large-cap equity funds, which invest in well-established companies with stable earnings. Additionally, consider mid-cap and small-cap equity funds for potential higher returns, albeit with higher risk.

Remember, while equity funds offer growth potential, they also carry market risk. It's crucial to maintain a diversified portfolio across asset classes to mitigate risk.

Consulting with a Certified Financial Planner can help fine-tune your allocation and select the right equity funds based on your risk tolerance and investment horizon. By incorporating equity funds alongside other investment vehicles, you can pursue both capital growth and income generation effectively.

Ans: Congratulations on taking the initiative to invest at a young age! Let's explore a diversified investment strategy tailored to your financial situation and goals.

Assessing Investment Allocation
Mutual Funds (MF):

Allocate a significant portion of your monthly investment towards mutual funds, considering their potential for long-term growth and diversification benefits.
Aim to invest around 60-70% of your monthly investment amount in mutual funds across various categories such as large-cap, mid-cap, and multi-cap funds.
Insurance:

While insurance is essential for financial protection, allocate a smaller portion of your investment towards insurance premiums.
Consider investing around 10-20% of your monthly investment amount in insurance policies such as term insurance for adequate coverage.
Emergency Fund:

Build an emergency fund equivalent to 3-6 months of living expenses to cover unexpected financial needs.
Allocate a portion of your monthly investment towards gradually building your emergency fund until it reaches the desired level.
Other Investments:

Explore other investment avenues such as fixed deposits, recurring deposits, or Public Provident Fund (PPF) for stable returns and tax benefits.
Allocate a small portion of your monthly investment, around 10-20%, towards these conservative investment options to ensure a balanced portfolio.
Advantages of Actively Managed Funds Over Index Funds
Actively managed mutual funds offer the expertise of professional fund managers who actively select and manage the fund's investments to outperform the market.
These funds have the flexibility to adapt to changing market conditions and capitalize on investment opportunities, potentially yielding higher returns.
Unlike index funds, which passively track a market index, actively managed funds can generate alpha through active portfolio management and security selection.
Considerations for Direct Fund Investment
While direct funds offer lower expense ratios compared to regular funds, they require active involvement in research, monitoring, and portfolio management.
Direct fund investors must possess the necessary knowledge and expertise to select suitable funds and manage their investment portfolio effectively.
Investing through a Certified Financial Planner (CFP) or Mutual Fund Distributor (MFD) provides access to professional guidance and personalized investment advice, enhancing the overall investment experience.
Conclusion
By following a disciplined investment approach and diversifying across various asset classes, you can build a robust investment portfolio that aligns with your financial goals and risk tolerance. Remember to review your investments periodically and make adjustments as needed to stay on track towards achieving your objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hi,
You are young and have the time to invest for long duration. We advise that you strive to increase your investment to 15-20k per month(less than half your income) over the next 10-15 Years to achieve a good Corpus. You can plan to invest in a mix of Large, Mid & Small-cap funds with a higher allocation to Mid & Small-cap funds.

Best Regards,
Anil Rego,
Founder & CEO,
Right Horizons