Do you have personal finance queries?
Please ask your questions HERE and rediffGURU Ramalingam Kalirajan, founder, Holistic Investments (external link), will answer your queries.
Kick: Sir I am PSB employee having salary of 1.1 lac age 34 years and having fd worth 35 lakh and loan against tdr of 25 lakh have invested on land now there market price is 50 lakh. I'm doing sukanya samriddhi yojana from last 4 years of 1.5 lakh and monthly mutual fund 2k sip on AVG 3k lump sum investment in total of 7 mutual funds crypto now valued at 2.5 lakh. Now I want create Rs 4 cr corpus by 2040 now I have to repay my loan or invest in some other place where interest is served by fd interest now. I can invest 50k monthly
Considering your financial situation and goals, here are some tailored recommendations:
1. Loan Repayment vs. Investment:
• Evaluate the interest rate on your loan against the potential returns from alternative investments.
• If the interest rate on your loan is higher than the returns you expect to earn from investments, it may be prudent to prioritise loan repayment to reduce debt burden and interest expenses.
2. Investment Strategy:
• With a monthly investment capacity of 50k, focus on systematic investment plans (SIPs) in mutual funds aligned with your risk tolerance and investment horizon.
• Consider diversifying your mutual fund portfolio across different asset classes and fund categories to spread risk and optimise returns.
3. Asset Allocation:
• Maintain a balanced asset allocation based on your risk profile and investment objectives.
• Allocate investments across equity, debt, and possibly real estate or other alternative assets to achieve diversification and mitigate risk.
4. Review Existing Investments:
• Review your existing investments in FDs, Sukanya Samriddhi Yojana, mutual funds, and cryptocurrency.
• Ensure they are aligned with your long-term financial goals and make adjustments if necessary to optimise returns and mitigate risks.
5. Financial Planning:
• Consider consulting with a Certified Financial Planner to create a comprehensive financial plan tailored to your goals and circumstances.
• They can help you analyse your current financial situation, identify areas for improvement, and develop a roadmap to achieve your target corpus by 2040.
6. Monitor and Adjust:
• Regularly monitor the performance of your investments and make adjustments as needed based on changes in market conditions, personal circumstances, and financial goals.
• Stay informed about investment opportunities and market trends to make informed decisions and maximise returns.
By prioritising loan repayment if it's financially beneficial, optimising your investment strategy, and seeking professional guidance, you can work towards building a 4 crore corpus by 2040 and achieve your long-term financial objectives.
Anonymous: I would like to invest a Crore of rupees, for monthly income.
I was thinking of a bouquet of Corporate FDs (Shriram, Sundaram, Bajaj etc), LIC, Bank FD's and Mutual Funds. My question how safe are Corporate FDs? Like Bank deposits have an Insurance cover for up to Rs 5 lakh, are there any insurance for corporate deposits?
How much is the safe amount to deposit in Corporate FDs. Any other investment you advice for a safe 8-9% return. Can I invest in Gold, without actually buying it?
Investing a significant amount like a crore for monthly income requires careful consideration of various factors. Let's address your concerns and explore suitable investment options:
Corporate FDs:
• Corporate Fixed Deposits (FDs) offer higher interest rates compared to bank FDs but come with higher risk.
• Unlike bank deposits, corporate FDs do not have any insurance cover. Therefore, investing a large sum in corporate FDs may expose you to higher risk.
• While some reputed companies offer corporate FDs with stable returns, it's essential to assess the creditworthiness and reputation of the issuing company before investing.
• Consider diversifying your fixed income investments across multiple corporate FDs to mitigate risk, and limit exposure to a portion of your overall investment portfolio.
LIC and Bank FDs:
• LIC schemes like LIC Jeevan Akshay offer annuity options providing regular income for life, suitable for retirement planning.
• Bank FDs provide safety and liquidity, but interest rates are relatively lower compared to corporate FDs.
• For safety, ensure that your bank FD investments are within the limit of Rs. 5 lakh per depositor per bank, covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Mutual Funds:
• Debt mutual funds, particularly low-duration or short-duration funds, can provide stable returns with relatively lower risk compared to equity investments.
• Consider investing in debt mutual funds with a track record of consistent returns and low expense ratios, aligning with your risk appetite and investment horizon.
Gold Investments:
• Gold can act as a hedge against inflation and provide diversification to your investment portfolio.
• You can invest in gold through Gold Exchange Traded Funds (ETFs), Gold Savings Funds, or Sovereign Gold Bonds (SGBs), which offer safety, liquidity, and convenience without the need for physical storage.
Other Investment Options:
• Consider exploring other fixed income instruments like Government Savings Schemes (e.g., Senior Citizen Savings Scheme), Post Office Monthly Income Scheme (POMIS), and debt-oriented hybrid mutual funds for regular income with relatively lower risk.
• Evaluate your risk tolerance, investment horizon, and financial goals before making investment decisions. Consider consulting with a Certified Financial Planner to develop a comprehensive financial plan tailored to your needs and aspirations.
In summary, while corporate FDs offer higher returns, they also entail higher risk. Diversification across multiple investment avenues, including LIC schemes, bank FDs, mutual funds, and gold investments, can help achieve a balance between safety and returns. Always prioritise capital preservation and risk management when structuring your investment portfolio for regular income.
Shaleen: I have to invest 5k in MFs. Which funds to invest?
When selecting a mutual fund for investment, it's essential to consider your investment goals, risk tolerance, and investment horizon. Here are some general suggestions to help you choose a suitable mutual fund:
1. Consider Your Investment Goals: Determine whether you're investing for wealth creation, retirement planning, saving for a specific goal, or generating regular income.
2. Assess Your Risk Tolerance: Understand how comfortable you are with fluctuations in the value of your investments. If you prefer stability, consider conservative options like debt funds. If you're willing to take on more risk for potentially higher returns, equity funds may be suitable.
3. Evaluate Fund Categories: Mutual funds are available in various categories such as equity, debt, hybrid, and thematic funds. Choose a fund category that aligns with your investment objectives and risk profile.
4. Research Fund Performance: Review the historical performance of mutual funds within your chosen category. Look for consistent performance over different market cycles and compare the fund's returns with its benchmark and peers.
5. Check Fund Manager's Track Record: Assess the track record and experience of the fund manager managing the mutual fund scheme. A skilled and experienced fund manager can significantly impact the fund's performance.
6. Expense Ratio and Fees: Consider the expense ratio and other fees associated with the mutual fund scheme. Lower expenses can translate into higher returns for investors over the long term.
7. Diversification: Choose a mutual fund that provides adequate diversification across sectors and companies to reduce concentration risk.
Based on these considerations, you can explore different mutual fund categories such as large-cap equity funds, diversified equity funds, or balanced hybrid funds. It's essential to conduct thorough research and consult with a Certified Financial Planner if needed to select the most appropriate mutual fund for your investment needs.
Ajay: Hello sir, I am 38 years old and monthly income is 1.4 lakh. I have a home loan EMI of 60000. I have started to invest 30000 in MF SIP one year ago.
My funds are Mirae less tax saver, ICICI prudential technology direct, ICICI prudential commodities fund, Nippon india small cap, quant small and midcap, axis small cap, tata digital India, ICICI prudential Nasdaq 100 index, Mirae asset large & midcap.
How much do you think if I invest like this for 10 years with some increase every year I should be able to save? Is there any advice on funds that I am investing in?
It's commendable that you've taken proactive steps towards securing your financial future by starting your mutual fund SIPs.
Here's some advice and guidance tailored to your situation:
- Investing 30,000 per month in mutual fund SIPs is a wise decision that demonstrates your commitment to long-term wealth creation.
- Diversifying your investments across various mutual funds reflects a balanced approach to risk management and potential returns.
- Over a 10-year investment horizon, your disciplined approach to investing can potentially lead to significant wealth accumulation.
- It's essential to periodically review and adjust your investment portfolio to ensure it remains aligned with your financial goals and risk tolerance.
- Consider gradually increasing your SIP contributions over time to take advantage of the power of compounding and accelerate wealth creation.
- While your current fund selection appears diversified, consider consulting with a Certified Financial Planner to ensure your portfolio is optimised for long-term growth.
A professional can provide personalised advice and recommend adjustments to your investment strategy based on market conditions and your individual financial goals.
Remember, investing is a journey, and consistency, patience, and discipline are key to achieving your financial objectives. Keep up the good work, and stay focused on your long-term goals!
- You can ask rediffGURU Ramalingam Kalirajan your questions HERE.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
