Hello I am 26 years old and my salary is 80k. How should I start investment

Ans: Hello and thanks for writing to me. I am assuming that you are looking to invest for retirement and long term wealth creation.

As you are at 50 years, you can consider starting SIP's in a mix of multi-asset allocation funds and balanced advantage funds. These schemes invest in a mix of assets and can reduce volatility.

If you can share other relevant details like your risk taking appetite and your horizon, I may recommend another mix of funds.

Ans: It's wonderful that you're considering investment options to secure your financial future. Let's explore suitable avenues aligned with your goals.

Assessing Your Current Financial Situation:

Before delving into investment options, let's assess your current financial status, including income, expenses, assets, and liabilities.

Identifying Investment Objectives:

What are your investment objectives? Are you investing for retirement planning, wealth accumulation, or specific financial goals like education or travel?

Analyzing Risk Tolerance:

Understanding your risk tolerance is crucial in determining the appropriate investment strategy. Are you comfortable with market fluctuations and volatility?

Exploring Investment Avenues:

Equity Investments: Equity investments offer the potential for high returns over the long term but come with higher risk. They include direct stocks or equity mutual funds managed by professional fund managers.

Debt Instruments: Debt instruments like fixed deposits, bonds, or debt mutual funds provide stability and regular income. They are suitable for investors seeking capital preservation and steady returns.

Systematic Investment Plans (SIPs): SIPs allow you to invest regularly in mutual funds, harnessing the power of compounding to build wealth over time. They offer flexibility and convenience in investing.

Retirement Planning: Investing in retirement-focused instruments like Employee Provident Fund (EPF), Public Provident Fund (PPF), or National Pension System (NPS) ensures financial security during retirement.

Consultation with a Certified Financial Planner:

Engaging with a Certified Financial Planner (CFP) ensures personalized guidance tailored to your financial goals and risk tolerance. A CFP can help you design a customized investment plan to achieve your objectives effectively.

Conclusion:

In conclusion, exploring investment options tailored to your financial goals and risk tolerance is essential for long-term wealth accumulation. By consulting with a Certified Financial Planner and diversifying your portfolio across equity, debt, and retirement-focused instruments, you can build a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: It's great that you want to start investing and saving. With an income of ?900 per month, it can be challenging, but every small step counts. Let’s explore how you can begin saving and investing.

Understanding Your Current Financial Situation
First, understand your income and expenses. Track your monthly spending to identify areas where you can cut back. Even small savings can add up over time.

Setting Realistic Goals
Start with small, achievable goals. Aim to save a portion of your income each month. This helps build a habit of saving.

Creating a Budget
Track Income and Expenses

List all your monthly income and expenses.
Identify non-essential expenses you can reduce or eliminate.
Allocate Savings

Aim to save at least 10% of your income. With ?900, this means saving ?90 each month.
Emergency Fund

Build an emergency fund for unexpected expenses. Start small, aim for ?500 initially.
Saving Methods
Savings Account

Open a basic savings account. It’s safe and earns a small interest.
Recurring Deposit (RD)

Consider starting a recurring deposit with your bank. You can deposit a small fixed amount each month. It’s a disciplined way to save.
Basic Investment Options
Systematic Investment Plans (SIPs)

Start a SIP with as little as ?500 per month. Mutual funds have options for low initial investments. SIPs help in disciplined investing and can offer good returns over time.
Public Provident Fund (PPF)

PPF is a safe and long-term investment option. You can start with small amounts and increase contributions as your income grows.
Government Schemes
Pradhan Mantri Jan Dhan Yojana (PMJDY)

Open a Jan Dhan account. It offers no minimum balance requirement and other benefits like insurance.
Atal Pension Yojana (APY)

A pension scheme for workers in the unorganised sector. You can contribute small amounts to secure your retirement.
Increasing Your Income
Skill Development

Invest in learning new skills to increase your earning potential. Look for free or low-cost courses online.
Part-Time Work

Consider part-time jobs or freelancing to supplement your income. This additional income can boost your savings and investment capacity.
Discipline and Patience
Consistency

Regular saving and investing, no matter how small, will yield results over time. Be consistent with your contributions.
Avoid Debt

Avoid unnecessary loans or credit. If you must borrow, ensure you can manage the repayments.
Reviewing and Adjusting
Regular Review

Review your budget and savings plan regularly. Adjust your savings and investment as your income grows.
Seek Advice

Consult a Certified Financial Planner for personalized advice as your financial situation evolves.

Starting with a small income can be tough, but your determination to save and invest is commendable. Every rupee saved is a step towards financial security. Stay committed, and over time, you’ll see the benefits of your disciplined approach.

Conclusion
Beginning your investment journey at 29 with a limited income is challenging but possible. Start by creating a budget, saving consistently, and exploring safe investment options. Increase your income through skill development and part-time work. Regularly review your progress and adjust your plan as needed. Your commitment to saving and investing will pave the way for a secure financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: At 32, it’s great that you're starting to think about investments. With a monthly income of Rs. 50,000, you have the potential to build wealth over time with consistent, well-structured investments.

To guide you, here’s a detailed approach to starting your investment journey in a systematic, sustainable way.

1. Build Your Emergency Fund First

Starting with an emergency fund is essential. It creates a financial cushion for unexpected expenses and emergencies.

Aim to save 6-8 months of your monthly expenses. This should cover rent, bills, groceries, and healthcare.
Keep this in a high-interest savings account or a liquid mutual fund. It keeps funds easily accessible, avoiding disruptions to long-term investments.
2. Evaluate Your Monthly Budget and Savings Potential

Reviewing your budget will give clarity on how much you can save each month.

Track your monthly expenses and identify areas where you can cut down.
After setting aside your expenses, aim to save at least 20-30% of your income consistently.
This dedicated saving amount will go toward different investments.
3. Establish Insurance for Financial Security

Investing is crucial, but protection comes first. Without adequate insurance, your financial goals could face setbacks in case of any unfortunate event.

Term Insurance: Protect your family with a term insurance plan that covers at least 10-15 times your annual income.
Health Insurance: Ensure you have health insurance covering critical illnesses and hospitalization costs. Preferably go for a family floater plan if you have dependents.
4. Consider Long-Term Investment Goals

Define your long-term financial objectives. These goals could include:

Retirement corpus
Down payment for a home
Funds for children's education or marriage
Clearly defined goals help align your investments with specific time horizons and risks.

5. Start SIPs in Actively Managed Mutual Funds

Systematic Investment Plans (SIPs) in actively managed mutual funds allow you to begin investing with discipline and consistency.

Actively managed funds outperform index funds in most cases. They adapt to changing market conditions better.
Investing in SIPs offers the advantage of rupee-cost averaging and compounding, helping you build wealth steadily.
6. Avoid Direct Mutual Funds – Choose Regular Funds with a CFP

While direct funds appear cost-effective, they can lack guidance.

Investing through a certified financial planner (CFP) provides the benefit of professional insights.
A CFP offers ongoing portfolio management, helping you make the best decisions for market trends and personal goals.
Regular plans might have slightly higher costs, but the guidance from a CFP can outweigh these costs in terms of returns.
7. Set Up a Mix of Equity and Debt Mutual Funds

For a balanced portfolio, consider both equity and debt funds. Each category offers unique benefits:

Equity Mutual Funds: Ideal for long-term wealth creation, suitable for goals 5-10 years away. Choose diversified or flexi-cap funds for balanced growth.
Debt Mutual Funds: Good for short-term stability, these funds reduce risk and offer modest returns. Suitable for goals within 1-3 years.
This combination provides growth potential while balancing risks.

8. Tax Implications on Mutual Funds

Understanding tax implications is essential as it affects your returns.

Equity Funds: Long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%. Short-term gains are taxed at 20%.
Debt Funds: Both LTCG and STCG are taxed based on your income slab. Holding debt funds for a longer period can reduce the tax impact.
Having a CFP manage your tax liabilities can maximize your returns.

9. Set Financial Milestones for Different Life Stages

Plan your investments around major life events and responsibilities.

In 5 Years: Aim to achieve short-term goals such as travel or higher education.
In 10-15 Years: Focus on long-term goals like buying a house or funding higher education for your children.
In 20+ Years: Prepare for retirement by investing in instruments that align with long-term growth.
10. Take Advantage of Tax-Advantaged Investment Options

Investing in tax-saving instruments helps you save taxes while meeting financial goals.

Public Provident Fund (PPF): Offers a secure, tax-free return, which is ideal for building a retirement corpus.
ELSS Mutual Funds: Equity-linked savings schemes allow for wealth creation while providing tax savings under Section 80C.
11. Consider National Pension System (NPS) for Retirement Planning

The National Pension System offers tax benefits and builds a retirement corpus.

With NPS, you can allocate funds across equity, corporate debt, and government securities.
NPS provides tax benefits under Section 80CCD and Section 80C.
Remember that retirement requires a significant amount, so an early start in NPS helps secure future comfort.

12. Automate Your Investments for Discipline

Automating your investments keeps you disciplined and consistent.

Set up automatic transfers for SIPs and other recurring investments. This approach ensures consistent contributions.
Regular investment prevents the temptation to spend on non-essential items.
13. Review and Adjust Your Portfolio Periodically

Investing is not a one-time activity. Your portfolio needs regular assessment.

Check your portfolio performance annually, ideally with a CFP. Regular reviews allow you to stay on track.
Adjust investments if there’s any change in personal circumstances, financial goals, or market conditions.
14. Final Insights

With a steady approach, a balanced portfolio, and financial protection, you can secure your financial future. Begin by saving regularly, investing in a disciplined manner, and reviewing your portfolio. These practices ensure you stay aligned with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment