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How can a 25-year-old invest 1.5 lakh rupees in diverse long-term options?

Ramalingam

Ramalingam Kalirajan  |8936 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 16, 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
Asked by Anonymous - Dec 13, 2024Hindi
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I have a sum of 1.5 lakh rupees which I want to invest but in diverse options. What could be such schemes for investment long term

Ans: Investing Rs. 1.5 lakh is a great opportunity to build a solid portfolio. A diversified approach ensures balanced risk and stable long-term growth. Below are well-suited options to consider for your investment.

Mutual Funds for Wealth Creation
1. Equity Mutual Funds
These funds are ideal for long-term goals.
They invest in stocks and offer high returns compared to other instruments.
Actively managed funds help you outperform market indices.
2. Balanced Advantage Funds
These funds balance equity and debt investments.
They reduce volatility while offering reasonable returns.
Suitable for moderate risk appetite and long-term growth.
3. Debt Mutual Funds
These funds are safer and provide predictable returns.
Useful for preserving capital and managing portfolio risk.
Invest in debt funds for goals within 3-5 years.
Government-Backed Schemes
4. Public Provident Fund (PPF)
PPF offers guaranteed returns with tax benefits.
The lock-in period is 15 years, aligning with long-term goals.
Interest earned is tax-free and compounds annually.
5. Sukanya Samriddhi Yojana (SSY)
Consider SSY if you have a daughter under 10 years of age.
High fixed returns and tax benefits make it a secure option.
Ideal for building a corpus for your daughter’s education or marriage.
6. National Pension System (NPS)
NPS is designed for retirement planning.
It provides equity exposure with low management costs.
Tax benefits under Section 80C and 80CCD (1B) enhance returns.
Gold as a Strategic Investment
7. Sovereign Gold Bonds (SGBs)
SGBs offer the benefit of gold investment without storage concerns.
These bonds provide annual interest along with gold price appreciation.
Ideal for long-term wealth preservation and diversification.
Emergency Fund and Liquid Options
8. Liquid Mutual Funds
Allocate a small portion to liquid funds for emergencies.
These funds offer easy withdrawal and low risk.
Returns are better than traditional savings accounts.
9. Recurring Deposits or Fixed Deposits
Recurring deposits help you create a short-term savings buffer.
Fixed deposits offer guaranteed returns but are less tax-efficient.
Insurance-Cum-Investment Policies
10. Review Existing LIC or ULIP Policies
Insurance-cum-investment products often deliver low returns.
Assess the surrender value of such policies.
Reinvest the amount in mutual funds for better returns.
Suggested Allocation Strategy
To diversify Rs. 1.5 lakh, consider this allocation:

Rs. 50,000: Equity Mutual Funds for long-term wealth creation.
Rs. 30,000: Balanced Advantage Funds for moderate risk exposure.
Rs. 20,000: Public Provident Fund for secure, tax-free growth.
Rs. 20,000: Sovereign Gold Bonds for diversification.
Rs. 30,000: Liquid Funds for emergencies or short-term needs.
Tax Efficiency
Mutual funds provide tax efficiency for long-term gains.
LTCG above Rs. 1.25 lakh is taxed at 12.5% for equity mutual funds.
Debt mutual funds are taxed as per your income slab.
Government-backed schemes like PPF and SSY offer tax-free returns.
Finally
Your Rs. 1.5 lakh can grow steadily through diversified investments.

Mutual funds should form the core of your portfolio for wealth creation.

Add secure options like PPF and SGBs for balance and stability.

Review your existing LIC policies and move towards higher-return investments.

Stay disciplined and monitor your portfolio regularly with the help of a Certified Financial Planner.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Moneywize   | Answer  |Ask -

Financial Planner - Answered on Feb 03, 2024

Asked by Anonymous - Feb 02, 2024Hindi
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I have Rs 3.5 lakh and want to invest this amount for a period of 5 years. I can take low to moderate risk. What options would you suggest for me? I am expecting only moderate returns of up to 15-18% for my investments. What would you suggest for me if I want say higher returns in the range of 20-25%?
Ans: For a 5-year investment horizon with a preference for low to moderate risk, it's important to consider a well-diversified portfolio to balance potential returns and risks.

Here are some investment options based on your risk preferences:

• Low to Moderate Risk (Expecting returns of 15-18%):

1. Equity Mutual Funds:

Opt for large-cap or multi-cap equity mutual funds. These funds provide exposure to well-established companies and offer the potential for moderate returns. Choose funds with a consistent track record and a focus on risk management.

2. Balanced Funds:

Balanced funds, also known as hybrid funds, invest in a mix of equities and debt instruments. They provide a balance between growth and stability, making them suitable for investors with a moderate risk appetite.

3. Debt Mutual Funds:

Consider allocating a portion of your investment to debt mutual funds, particularly short to medium-term funds. These funds invest in fixed-income securities and can provide stable returns with lower volatility compared to equities.

4. Fixed Deposits (FDs):

Bank fixed deposits and corporate FDs offer capital protection and a fixed rate of return. While the returns may be relatively lower, they provide a stable and predictable income stream.

• Higher Risk (Expecting returns of 20-25%):

1. Mid and Small-Cap Equity Funds:

If you are willing to take on a higher level of risk, consider mid and small-cap equity funds. These funds invest in smaller companies with higher growth potential but come with increased volatility.

2. Sector-Specific Funds:

Allocate a small portion of your portfolio to sector-specific funds. These funds focus on specific industries like technology, healthcare, or banking, which may offer higher returns but come with sector-specific risks.

3. Unit Linked Insurance Plans (ULIPs):

ULIPs combine insurance with investment and offer the flexibility to invest in equity or debt funds. However, be mindful of the charges associated with ULIPs and thoroughly understand the terms and conditions.

4. Stocks:

Direct equity investment in individual stocks can potentially provide higher returns. However, stock market investments carry higher risk and require a good understanding of the market. Diversify your stock portfolio to manage risk.

5. Systematic Investment Plans (SIPs):

Consider investing in equity mutual funds through Systematic Investment Plans (SIPs). SIPs allow you to invest a fixed amount regularly, promoting disciplined investing and taking advantage of rupee cost averaging.

Before making any investment decisions, carefully assess your financial goals, risk tolerance, and investment horizon. Diversification across different asset classes can help manage risk. It's also advisable to consult with a financial advisor to create a personalised investment strategy based on your specific situation and goals.

..Read more

Ramalingam

Ramalingam Kalirajan  |8936 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 07, 2024

Asked by Anonymous - Apr 12, 2024Hindi
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Need to invest about a crore in a scheme that is safe and secure where the capital is safe plus good quarterly returns. I m 62 retired
Ans: As a retired individual seeking a safe and secure investment with good quarterly returns for a significant sum of money, it's essential to prioritize capital preservation while aiming for reasonable returns. Here are some investment options to consider:

Fixed Deposits (FDs): Fixed deposits offered by banks provide a safe and predictable way to earn returns on your investment. While the interest rates may vary, you can opt for FDs with quarterly interest payouts to ensure a steady income stream. Ensure that you choose reputed banks with high credit ratings for added safety.
Senior Citizen Savings Scheme (SCSS): SCSS is a government-backed savings scheme designed specifically for senior citizens. It offers attractive interest rates and quarterly interest payouts, making it suitable for retirees looking for regular income. The scheme has a tenure of 5 years, which can be extended by an additional 3 years.
Post Office Monthly Income Scheme (POMIS): POMIS is a low-risk investment option offered by India Post that provides monthly interest payouts. While the returns may be slightly lower compared to other investment avenues, POMIS offers capital protection and regular income, making it suitable for retirees seeking stability.
Pradhan Mantri Vaya Vandana Yojana (PMVVY): PMVVY is a government-backed pension scheme exclusively for senior citizens. It provides guaranteed returns and offers the option of quarterly, half-yearly, or annual pension payouts. The scheme has a tenure of 10 years and can be an attractive option for retirees looking for a secure income source.
Debt Mutual Funds: Debt mutual funds invest in fixed-income securities such as government bonds, corporate bonds, and money market instruments. While they offer relatively higher returns compared to traditional fixed deposits, it's essential to choose funds with a conservative investment approach and a track record of consistent performance.
Before investing a significant sum of money, consider factors such as liquidity needs, tax implications, and your risk tolerance. It's advisable to diversify your investments across multiple avenues to mitigate risk and ensure a balanced portfolio. Additionally, consult with a Certified Financial Planner (CFP) or financial advisor to tailor an investment strategy that aligns with your financial goals and retirement needs.

..Read more

Ramalingam

Ramalingam Kalirajan  |8936 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

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Iam 38 and have 20 lakhs as my savings which I want to invest for 1,3,5 and 7 years. Please suggest appropriate as I'm willing to take risk but want good returns.
Ans: Investing with specific time horizons in mind is a smart approach. Here's a suggested investment strategy considering your willingness to take risks and aiming for good returns:

1-Year Investment (Short-term):
Liquid Funds: These funds offer stability and liquidity. They invest in short-term money market instruments. Given your short time horizon, liquid funds would be suitable as they offer better returns than savings accounts and are low-risk.
3-Year Investment (Medium-term):
Short-term Debt Funds or Ultra Short-term Funds: These funds invest in fixed-income securities with a maturity period of 1-3 years. They offer relatively higher returns than liquid funds and are less volatile than equity funds, making them a suitable choice for a 3-year horizon.
5-Year Investment (Medium to Long-term):
Balanced Funds or Hybrid Funds: These funds invest in a mix of equity and debt instruments. They offer potential for higher returns compared to debt funds while providing some cushion against market volatility. This combination could be ideal for a 5-year horizon.
7-Year Investment (Long-term):
Equity Mutual Funds: Given your willingness to take risks and the longer time horizon, equity funds would be appropriate.
Large Cap Funds: These funds invest predominantly in large-cap companies which are relatively stable and offer moderate returns.
Mid & Small Cap Funds: These funds invest in mid and small-cap companies which have the potential to offer higher returns but come with higher volatility.
Multi-Cap Funds: These funds provide diversification across market caps and offer flexibility to capitalize on market opportunities.
General Tips:

Diversification: Spread your investments across different asset classes and fund categories to reduce risk.
Regular Review: Periodically review your investments to ensure they align with your financial goals and adjust as necessary.
Risk Tolerance: While you're willing to take risks, ensure your investments align with your risk tolerance. Remember, higher returns come with higher volatility.
Lastly, it's advisable to consult with a Certified Financial Planner to tailor this strategy according to your specific financial situation, goals, and risk tolerance. They can provide personalized advice and help you navigate the complexities of investing.

..Read more

Ramalingam

Ramalingam Kalirajan  |8936 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 20, 2024

Asked by Anonymous - Jun 20, 2024Hindi
Money
Iam 440yr old married women, I work in the government sector my take home salary is 73k after all deductions. Ihave personal lone of 25lak, where I pay around 40emi per month, I have so far 19lak in NPS, around 2lak in mutal fund and 1lak in equity, i have few LIC policies and Health insurance and a term plan too. I want to know a few investment options for long term with minimum investment but good returns.
Ans: It’s great to see your proactive approach in planning for long-term investments. Let's break down your situation and explore some investment options that align with your goals and circumstances.

Assessing Your Current Financial Situation
You have a stable job in the government sector with a take-home salary of Rs 73,000 after deductions. You also have some existing investments and insurance policies. This is a great start.

You are paying an EMI of Rs 40,000 for a personal loan of Rs 25 lakh. This is a significant portion of your salary, and it would be wise to focus on repaying this loan as quickly as possible.

Your current investments include:

Rs 19 lakh in NPS
Rs 2 lakh in mutual funds
Rs 1 lakh in equity
LIC policies, health insurance, and a term plan
Given these details, let's explore some investment options that could help you achieve good returns with minimal investment over the long term.

Prioritizing Loan Repayment
Your first priority should be to manage your personal loan. With an EMI of Rs 40,000, this loan is a major financial commitment. Paying off this loan faster can free up more funds for other investments.

Consider making extra payments towards the principal amount whenever possible. This can reduce the loan tenure and the total interest paid. Allocating bonuses or any additional income towards this loan repayment can be a smart move.

Enhancing Your NPS Contribution
Your Rs 19 lakh in NPS is a solid foundation for your retirement planning. NPS offers a mix of equity, corporate bonds, and government securities, providing a balanced risk-reward ratio. Increasing your contributions to NPS can be beneficial due to the tax advantages and potential for compounded growth over time.

Given your long-term horizon, you might consider allocating a higher percentage towards equity within your NPS. Equity investments typically offer higher returns over the long term compared to debt instruments.

Exploring Mutual Funds for Long-Term Growth
You already have Rs 2 lakh in mutual funds, which is a good start. Investing in mutual funds can provide diversified exposure to various asset classes like equity and debt. Here’s why actively managed mutual funds could be a better choice for you:

Professional Management: Actively managed funds have fund managers who make investment decisions based on market conditions, aiming to outperform benchmarks.

Flexibility: These funds can adapt to market changes, potentially providing better returns compared to index funds which are passively managed.

Diverse Options: There are various types of actively managed mutual funds, such as large-cap, mid-cap, and small-cap funds. Diversifying your investments across these categories can spread risk and enhance returns.

It’s important to review and select funds based on their performance history, fund manager expertise, and alignment with your risk tolerance and financial goals.

Investing in Equity for Higher Returns
With Rs 1 lakh already in equity, you understand the potential for higher returns. Direct equity investments require careful analysis and a strong understanding of the stock market. Here are some tips for your equity investments:

Research Thoroughly: Invest in companies with strong fundamentals, good management, and growth potential. Keep an eye on market trends and news.

Diversify: Spread your investments across different sectors to mitigate risks. Avoid putting all your money in a single stock or sector.

Long-Term Perspective: Equity investments can be volatile in the short term. Stay invested for the long term to benefit from potential growth and compounding returns.

Reviewing LIC Policies and Insurance Coverage
It’s good that you have LIC policies, health insurance, and a term plan. However, it’s important to evaluate these policies periodically to ensure they meet your current needs and financial goals.

LIC Policies: These are typically investment-cum-insurance plans. Compare the returns on these policies with other investment options. If the returns are lower, consider surrendering these policies and reinvesting in mutual funds or other higher-return options.

Health Insurance: Ensure your health insurance coverage is adequate for your family's needs. Medical expenses can be a major financial burden, so having sufficient coverage is crucial.

Term Plan: This is a cost-effective way to ensure your family’s financial security in case of any unforeseen events. Make sure the coverage amount is sufficient to meet your family's future expenses and liabilities.

Balancing Risk and Returns with SIPs
Systematic Investment Plans (SIPs) in mutual funds can be an excellent way to invest regularly with discipline. SIPs allow you to invest a fixed amount regularly, taking advantage of rupee cost averaging and compounding benefits.

Start Small: Begin with an amount you’re comfortable with and gradually increase it as your financial situation improves.

Consistency: Invest consistently, regardless of market conditions. This helps in accumulating wealth over time and reduces the impact of market volatility.

Goal-Based Investing: Align your SIP investments with specific financial goals such as retirement, children’s education, or buying a house.

Emergency Fund and Financial Security
Before making new investments, ensure you have an adequate emergency fund. This fund should cover 6-12 months of living expenses, providing a financial cushion for unexpected situations like medical emergencies or job loss.

Having an emergency fund ensures that you won’t need to dip into your long-term investments during a financial crunch, thereby protecting your investment growth.

Exploring Tax-Saving Investment Options
As a salaried individual, it’s important to explore tax-saving investment options to reduce your tax liability while growing your wealth. Here are a few options to consider:

ELSS Funds: Equity Linked Savings Scheme (ELSS) funds offer tax benefits under Section 80C and have the potential for higher returns due to their equity exposure.

PPF: Public Provident Fund (PPF) offers a fixed return with tax benefits. It’s a safe, long-term investment option with a 15-year lock-in period.

SSY: Sukanya Samriddhi Yojana (SSY) is a government-backed scheme for the girl child, offering attractive returns and tax benefits.

Evaluating Direct vs. Regular Mutual Funds
You might wonder whether to invest in direct mutual funds or regular mutual funds. Here’s why regular funds, especially through a Certified Financial Planner (CFP), could be more beneficial:

Professional Guidance: Investing through a CFP provides access to professional advice, helping you make informed decisions and optimize your portfolio.

Holistic Planning: A CFP can help you with comprehensive financial planning, aligning your investments with your life goals.

Regular Monitoring: Regular funds come with the added advantage of ongoing monitoring and portfolio rebalancing, ensuring your investments remain aligned with your goals.

Direct funds might have lower expense ratios, but the benefits of professional guidance and support through regular funds often outweigh the cost difference.

Focusing on Long-Term Wealth Creation
Your goal is to achieve long-term wealth creation with minimum investment but good returns. Here are a few strategies to help you:

Stay Disciplined: Regular and disciplined investing is key to long-term wealth creation. Stick to your investment plan and avoid making impulsive decisions based on short-term market movements.

Review Periodically: Regularly review your investment portfolio to ensure it remains aligned with your goals and risk tolerance. Rebalance your portfolio as needed.

Educate Yourself: Stay informed about market trends and investment options. Continuous learning can help you make better investment decisions.

Final Insights
Planning for long-term investments requires a strategic approach and disciplined execution. Given your current financial situation, focusing on loan repayment, enhancing your NPS contributions, investing in actively managed mutual funds, and maintaining adequate insurance coverage can set you on the path to financial success.

Remember to prioritize building an emergency fund and consider tax-saving investment options to maximize your wealth creation efforts. Regularly review and adjust your investment plan to stay aligned with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |8936 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 15, 2025

Money
Good afternoon sir, I have no debt,have term life 1.85 cr and health insurance of 10 lakhs.After all my expenses I will be left with 15000 rupees.what is best way to invest for long term duration (at least 20 years). Please advise me
Ans: You have done very well by securing your life and health through insurance.

Having Rs. 15,000 available after expenses each month is a strong base.

Planning for a 20-year horizon can give you long-term wealth stability.

Let us explore how to make your savings work for your future.

Understanding Your Financial Position
You have Rs. 15,000 to invest monthly.

You hold term insurance of Rs. 1.85 crore and health cover of Rs. 10 lakhs.

Your investment horizon is 20 years, which is ideal for compounding.

Strategy for Long-Term Wealth Growth
With long-term investment, discipline matters more than market timing.

Investing regularly in a smart and simple way works better over time.

Let us see the best path.

Systematic Investment Plan (SIP)
SIP helps build wealth with monthly investing.

It removes the need to time the market.

SIP brings discipline and builds good financial habits.

It uses rupee cost averaging to reduce risk.

Over 20 years, compounding turns small amounts into wealth.

Use of Diversified Mutual Fund Categories
Mixing different mutual fund types spreads risk and balances returns.

Here’s a simple structure:

Large-cap funds offer safety and steady growth.

Flexi-cap funds give dynamic exposure across all company sizes.

Mid-cap funds offer higher growth with manageable risk.

Hybrid funds balance equity and debt in one fund.

Why Active Funds Over Index Funds
Index funds follow the market. They can’t beat it.

In falling markets, they fall just as much.

Actively managed funds can reduce risk during corrections.

Experienced fund managers make informed moves to protect gains.

Avoid Direct Mutual Funds
Direct funds seem cheaper but come without guidance.

You may make wrong choices or panic in bad markets.

Regular funds with guidance help you stay on track.

You benefit from experience and timely reviews.

Real Estate Is Not The Right Fit
Real estate needs large capital.

It is not liquid. You can’t sell part of it.

Maintenance, paperwork, and taxes are tiring.

Mutual funds are simple and flexible.

Keep A Review Process
Every year, review your progress.

Adjust investments if your goals or life changes.

Rebalance if one fund grows more than others.

Invest With a Goal in Mind
Define your goals. Retirement? Children’s future?

Keep time and priority for each.

Map investments to each goal.

Invest Based on Risk Tolerance
Know how much risk you can take.

If unsure, take medium risk to start.

Don’t chase returns. Stay consistent.

Consider a Step-Up Plan
Increase SIP as income grows.

Even Rs. 1,000 more every year helps.

Automate Everything
Keep SIP auto-debited from your account.

You won’t miss or delay investments.

Emergency Fund First
Keep 6 months’ expenses aside.

Use savings account or liquid funds.

Tax Planning Angle
Use tax-efficient investments under tax laws.

Equity mutual funds are tax-friendly over long term.

Family and Nomination Planning
Nominate your loved ones in every investment.

Keep records updated.

Final Insights
Starting with Rs. 15,000 monthly is a good move.

Keep it steady and invest in right mutual funds.

Over time, this will grow into a large corpus.

Avoid direct funds, index funds, and real estate.

Get professional guidance to stay disciplined.

Review once a year and increase SIP slowly.

Be patient. Let time and compounding work for you.

You are already doing well. Keep going this way.

Success in money life comes from simple steps repeated for long.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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

..Read more

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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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