I’d like to invest my surplus money in a good financial product. I’m 27 years old and I can save around Rs. 8000 per month. Can you please let me know how I can diversify my investments?
It is good to know that you are thinking of investing. You are quite young and hence this habit can build a good wealth over time if you start now.
Since your time horizon is longer, I would suggest that you go for equity mutual funds. Equity mutual funds invest their major part in equities and hence they provide better return in the longer term. However, the value of equity mutual funds fluctuates widely in short term. Typically equity mutual funds provide a return of 12% to 18% CAGR over longer time. Since the market has gone up in last 1-2 years, I would suggest you put s small part in equity mutual fund. You can put a part in debt fund as these funds are low risk. The return too is low at about 7% to 11%.
Recently Gold has corrected quite a bit. Hence you can think of putting some part of your investment in gold fund.
Do these investments under SIP (Systematic investment plan). As per this plan, a monthly investment will be taken automatically from your bank account and invested in these funds.
Divide your monthly investment in 3 parts. Put 3,000 in any good equity mutual fund, 3000 in debt fund, and rest 2,000 in gold fund.
You can invest in stocks, Mutual Funds, Fixed Deposits and corporate deposits. Take the advice of an expert. It is best to approach a financial planner who will tell you how you should invest based on your financial situation and risk appetite. Talk to friends and family members who invest. Read books, journals and newspapers for guidance. You can talk to your stock broker for advice but always take a second opinion since brokers might have vested interests. When you start investing in stocks it is best to go for known names and big firms that have a good business reputation. Still not sure? Start by investing in Mutual Funds.
Mutual Funds invest in stocks on your behalf. Investing in a Mutual Fund is the best way to start your journey into the stock market. Equity diversified funds are the ones you should start with. These funds invest across different companies so your risks are lowered. You can even opt for an Equity Linked Savings Scheme (ELSS). This will help you save tax
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It is said that you must be very careful when selecting best SIP plans for 5 years. It can restrict damage to your wealth in case an asset class and instrument goes for tailspin. Although everybody want to earn good returns in best SIP plans for 5 years without taking risk, but actually one needs to manage the risk and return both together. So, it is very important that you invest at the right place and Kotak mutual funds are the best option.