Financial Planning: Malhar Majumder
I am 25 and earn Rs 30,000 per month. I have investments in Public Provident Fund and National Savings Certificate. I also make a fixed deposit of Rs 20,000 (for a year) every month in the name of my father, a senior citizen. I pay my insurance premiums of the maturity amount (of my deposits). I invest Rs 1,000 a month in mutual funds. I am a conservative investor, but think I need to take more exposure in equity or other instruments.
There is no straightforward answer to your question. Whether or not you need more exposure in equity depends a lot on your future expectations. If you are looking at a moderate lifestyle and do not wish to see value of your investments change every day, your current asset allocation is okay.
It is also necessary to put forth that in the long term (say 10 years) equity does perform better than comparative asset classes. Therefore, you may take a moderate path instead of investing a lump sum in equity.
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Increase your systematic investment plan (SIP) investments by, say, Rs 1,000 per month every year. So, if your SIP amount is Rs 1,000 per month now, it may become Rs 2,000 per month next year. This way you will gradually get accustomed to volatility without losing a good night’s sleep.
I am a 34-year-old ayurvedic doctor. I have no fixed income; my monthly take-home ranges between Rs 7,000 and Rs 27,000. I am getting married by the year end. Currently, I have fixed deposits and postal savings of Rs 1 lakh. I manage to save Rs 10,000 every month, which I usually use for trading in stocks. What are the other instruments I should look at? I want to part-pay my marriage expenses and expand my business over the next two-three years.
You are a professional and the income volatility is natural and accepted. But volatile income coupled with volatile investments (trading in stocks) can be a recipe of disaster. As you are getting married, it is time you start an investment plan.
The menu would be a rich balance of stocks, bonds and gold. As for your business expansion plans, that may come with time and experience. One thing is for sure: you may need capital at one point for business; a disciplined investment habit would be very handy.
The writer is director, Gliese Consulting