Q. I am 31 years old and looking for some good investment options on a long-term basis for me and my husband. We can’t have a PPF account as we are NRIs right now. What is the best option for us? Last week, I started investing in Bajaj Allianz Goal Assure on a monthly basis. Is this a good option?
Malemnganbi Naorem
A. We do not know about your time frame and goal and what plan under the Bajaj Allianz Goal Assure you have chosen. This is a ULIP. So, if your primary purpose is to build wealth, you have to make sure the fund is performing well. Ask your adviser/agent to send regular updates on the growth of your money. If you find the performance not up to the mark in five years compared with mutual funds, consider stopping SIPs then. Try not to invest in bundled insurance products unless you are sure you understand all the features and costs.
As for other investment options, your time frame is paramount in deciding the risk you can handle. Having invested in a ULIP, I am assuming that you are willing to take market risks. If you are an NRI outside U.S./Canada, you can consider some exposure to index funds or ETFs in India. There are funds on the bellwether indices such as the Nifty 50, Next 50 or Nifty 500. You can own a mix of these for the equity component of your portfolio. This should constitute a long-term portfolio for the next 5-10 years, with regular SIPs to average the cost.
For the debt component, for the next 1-1.5 years, the low interest rate notwithstanding, consider NRE deposits in large private or public banks. We may see smaller banks coming under pressure post COVID-19 and hence, you need to be careful with the choice of banks.
This is not a time to chase returns in deposits. Look for safety. Lock into shorter tenures (1-1.5 years and not more). If you have a demat account, you can also check with your broker if they offer government securities (called gilts) and you can invest in those for the long term.
Any top-rated PSU bonds (nothing other than PSU) maturing in 3-4 years, traded in the market, will also be the options if your broker will help you with the same.
If you are based out of the U.S./Canada, your investment options are quite restricted here. It would be better for you to seek the advice of a fee-based investment adviser who is also familiar with the U.S. security and tax laws.
Q. I am retiring from the Indian armed forces at 35. I will get pension and some lump sum in the form of PF, gratuity and other dues. Where and how should I invest my money?
Ratul Basumatary
A. We are assuming that you will take up some employment and have some regular income or that your pension will be sufficient for regular expenses. In that case, you can invest this sum for the long term for any goal you may have, including retirement from your next career, a couple of decades later.
If you are very conservative and only safety matters, then consider large pubic or private bank deposits, post office time deposits and deposits with large NBFCs like HDFC or Sundaram Finance. Lock into these for only 1-1.5 years as rates are low now. You can renew them when rates go up a year or two later.
If you can take some risks, then our suggestion would be that you park 20-30% of your corpus in equity index funds such as Nifty 50 or Nifty 500 for a minimum of 7-10 years. You can also park 5-10% of this in Indian funds that invest in U.S. indices such as the S&P 500 or Nasdaq 100.
This will help provide exposure to the U.S. markets, too, by just investing in rupees.
Use a systematic investment plan to invest in these over the next 1-1.5 years and don’t let the market ups and downs worry you. Make sure 70% of your money is in safe in deposits. You can also consider the RBI Taxable Bond available with all major banks. Do not be lured by any high interest rates in deposits. Over the next 1-2 years, high interest will carry far higher risks.
(The author is co-founder, Primeinvestor.in)
