The only way to resolve this is by keeping things simple. Once I have exhausted my Section 80C commitments (Rs 100,000), which would include investments in equity-linked saving schemes, public provident fund, employee provident fund, national savings certificates, principal payout on home loans et cetera, and also taken care of my insurance needs under Section 80D, I will create a portfolio.
For starters, there should be an asset allocation that will change according to risk appetite and income. I would prefer 30 per cent in debt, 10 per cent in gold ETFs and the remaining 60 per cent in equities.
Here's the scenario. For instance, if I have a monthly take-home of Rs 50,000 per month and cash of Rs 300,000 lakh in my savings account, I will immediately invest a lump sum of Rs 1.80,000 in debt, gold ETFs and index funds.
I will build the equity portfolio through four monthly systematic investment plans of Rs 2,500 each. The advantage: I will have cash of Rs 1,10,000 in my savings account for emergencies.
There is further classification. In debt, there are options of short-and long-term mutual funds, fixed deposits, fixed maturity plans (FMPs) and others. In equities, there are stocks, equity diversified funds, sector funds and so on.
Image: A stock trader watches his monitor in the dealing room at brokerage firm Motilal Oswal Securities. | Photograph: Indranil Mukherjee/AFP/Getty Images
Also read: Oil prices: The rise and fall
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