Hello Gurus,
I am an NRI living in Saudi Arabia, aged 38. I am earning 4.5L a month and have around 30L in savings. I don’t own anything and want to start investing, however I am unsure of what to do. Should it be gold, a property on loan or nothing and stick with maximum saving strategy. Please suggest as I am naive to investment ????
Note: Please avoid profit through interest solutions.
Ans: At 38, your financial potential is commendable. Earning Rs 4.5 lakh monthly with Rs 30 lakh in savings shows great discipline. This sets the foundation for effective financial planning. It's crucial to grow your wealth systematically while adhering to your values and goals. Let’s explore the options that align with your requirements.
Importance of Diversified Investments
Keeping all your savings in a bank or single asset is not advisable. Inflation erodes the value of stagnant money. A diversified portfolio protects your wealth and ensures long-term growth. Consider investment options that align with Shariah principles to avoid interest-based earnings.
Shariah-Compliant Mutual Funds
Shariah-compliant mutual funds are a good fit for your values. These funds avoid interest-based instruments and focus on ethical investments.
Such funds invest in companies adhering to Islamic principles.
They avoid businesses involved in alcohol, gambling, or lending.
These funds are managed by professionals, ensuring growth potential.
They offer transparency and align with your religious beliefs.
However, actively managed funds with certified financial planners ensure personalized guidance and better returns.
Avoid direct funds as they lack professional advisory, making it harder to track performance. Regular plans through a certified financial planner provide tailored advice and periodic reviews.
Systematic Investment Plan (SIP) for Consistency
SIP is ideal for disciplined investing. You can start small and increase contributions as income grows.
SIP ensures rupee-cost averaging, reducing risk during market fluctuations.
It builds a corpus over time and instills financial discipline.
Combine SIP with periodic reviews for effective long-term growth.
Avoid Real Estate at This Stage
Purchasing a property on loan may seem attractive, but it has drawbacks:
Loans create financial pressure due to EMIs.
Real estate has liquidity issues and uncertain returns.
Maintenance costs further reduce profitability.
Instead, focus on liquid and growth-oriented investments.
Gold as a Strategic Investment
Gold is a hedge against inflation and economic uncertainty. However, limit its allocation to 10-15% of your portfolio.
Gold does not generate income but retains value.
Invest in gold ETFs or digital gold for safety and ease of management.
Avoid over-allocating to gold, as it limits long-term growth.
Emergency Fund Setup
Before investing, allocate a portion of your savings to an emergency fund.
Keep 6–12 months’ expenses in a separate account.
Use liquid funds for better returns while maintaining accessibility.
This ensures financial security during unforeseen events.
Insurance Coverage
Protect your family with proper insurance coverage.
Opt for a term insurance plan with adequate coverage.
Health insurance is essential for unexpected medical expenses.
Avoid investment-cum-insurance policies as they offer low returns.
If you hold ULIPs or LIC policies, consider surrendering them and reinvesting in mutual funds.
Tax Efficiency
Understanding taxation ensures you optimize returns:
Equity mutual funds: LTCG above Rs 1.25 lakh taxed at 12.5%; STCG taxed at 20%.
Debt mutual funds: Gains taxed as per your income slab.
Tax-saving investments like ELSS help save under Section 80C.
Consult a certified financial planner for tax-efficient strategies.
Regular Monitoring
Investing is not a one-time task. Regularly review your portfolio with your planner.
Rebalance your portfolio based on goals and market conditions.
Ensure alignment with Shariah principles and financial objectives.
Periodic reviews help maximize returns and mitigate risks.
Focus on Long-Term Goals
Identify your life goals and align investments accordingly:
Retirement corpus to maintain your current lifestyle.
Children’s education or other family commitments.
Financial independence and legacy planning.
Final Insights
Your financial journey is about balancing growth and values. With the right approach, you can achieve stability and prosperity. Start with Shariah-compliant funds, a disciplined SIP approach, and a diversified portfolio. Ensure regular monitoring and guidance from a certified financial planner.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment