Hi sir, I am 27 yrs old and going to get married within 6months and my hubby and me cumulatively get around 1lakh per month. We want to start our investments from now only, could you please suggest us the best combination of funds to invest so that after 20 urs we will be in a safe zone financially.
Ans: Congratulations on your upcoming wedding! Starting early with investments is a wise decision. Let's create a plan that ensures a secure financial future for both of you.
Monthly Income and Expenses
Your combined monthly income is Rs 1 lakh. It's important to allocate your income efficiently to maximize returns and achieve financial goals.
Emergency Fund
Create an emergency fund first. It should cover 6-12 months of expenses. This fund provides a safety net during unexpected situations.
Investment Strategy
Diversified Portfolio
A diversified portfolio balances risk and return. It should include a mix of equity, debt, and other instruments.
Systematic Investment Plan (SIP)
SIPs in mutual funds are ideal for long-term goals. They offer the benefits of compounding and rupee cost averaging. Invest in a mix of large-cap, mid-cap, and small-cap funds.
Equity Mutual Funds
Equity mutual funds provide higher returns over the long term. They are essential for wealth creation. Opt for actively managed funds through a Certified Financial Planner for better performance.
Debt Mutual Funds
Debt mutual funds add stability to your portfolio. They offer lower returns but are less risky than equities. Allocate a portion of your investments to debt funds for balance.
Monthly Investment Allocation
Emergency Fund: Start with Rs 5,000 per month until you reach your target.
Equity Mutual Funds (SIP): Allocate Rs 40,000 per month. Diversify across large-cap, mid-cap, and small-cap funds.
Debt Mutual Funds (SIP): Allocate Rs 20,000 per month. This provides stability to your portfolio.
EPF/PPF: Contribute Rs 5,000 per month. This ensures safe, long-term growth and tax benefits.
Gold: Consider investing Rs 5,000 per month in gold. Gold acts as a hedge against inflation.
Review and Adjust
Regularly review your investments. Assess their performance and rebalance your portfolio as needed. This ensures your investments align with your financial goals.
Avoid Common Pitfalls
Index Funds
Index funds may seem attractive due to low fees. However, they may not outperform actively managed funds. Actively managed funds, guided by experts, often yield better returns.
Direct Funds
Direct funds bypass intermediaries, saving costs. However, they require significant research and monitoring. Investing through a Certified Financial Planner can offer better guidance and performance.
Insurance-cum-Investment Policies
If you hold LIC, ULIP, or other investment-cum-insurance policies, consider surrendering them. Reinvest the proceeds in mutual funds for better returns. Insurance should be separate from investments.
Final Insights
Starting investments early sets a strong financial foundation. Ensure a balanced portfolio with equity, debt, and other instruments. Regularly review and adjust your investments to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
