Ask us for investments

August 25, 2019 11:00 pm | Updated 11:00 pm IST

Contract, Mortgage Document,Signing, Writing, Model Home

Contract, Mortgage Document,Signing, Writing, Model Home

Q. I am working in the merchant navy. I wish to invest ₹50 lakh but have no idea about where to put the money. My plan is to make a long-term investment that can assure me of good returns. I hear SIP is a good option but I am afraid of losing money. Kindly assist me.

Atinderpal Bajwa

A. If you are investing for the long term, it is a good idea to add some equity exposure through mutual funds. Systematic investment plan (SIP) is not an investment by itself. It is a way of channelling your investments systematically into mutual funds. It can be in equity or debt funds. While it is true that you may have short-term losses, investment in equity funds’ SIP helps you to invest through market ups and downs. Consider investing 50-60% of your corpus in fixed deposits and quality corporate deposits of top-rated companies. You can deploy the rest in equity index funds and multi-cap funds, either through SIPs or through systematic transfer plans (STPs) where you invest in liquid funds and then transfer every month to the respective equity funds. You can do the SIP/STP over the next 12-18 months. Have a holding period of not less than five years for the equity funds.

Q. I am currently working in a company, with a CTC of ₹4 lakh. I want to invest a part of my monthly salary in some good pension scheme. Which pension scheme can give me over ₹10,000 per month? I am currently 24 and may retire around the age of 55-60.

Ashok Raj

A. Since you are just 24, you should look at building a corpus that will help you post retirement. Choosing a traditional pension product will curtail the optimal growth of your wealth. Also, the ₹10,000 per month that you are talking of may be too little after 30-35 years, if you consider inflation. An assessment of how much you need post retirement can be made a little later when your other life aspirations receive clarity and are met. Until such time, it is best to start saving whatever you can in tax-efficient, inflation-beating, market-linked products.

Since you are young, you can consider investing in market-linked pension products like the National Pension System (NPS). You can also consider quality mutual funds to invest in, as your income increases. When you reach your retirement age, you can always use this corpus to invest in an immediate annuity plan where you can start receiving the pension immediately.

Q. I am 32 years old and plan to retire after seven years. I want to buy a house or plot (to build a house) with a home loan. I found that I have to pay hefty interest on it. I am not sure of my second career and where I will settle down. Please advise if it is a good idea to buy a house now without knowing about my next career location. I can increase my savings up to ₹15,000 per month. Please suggest the best option to save money for a house without taking risk.

Sikandar Khatri

A. If you plan to have a ‘second’ career, then we assume you’re not really retiring. However, if you are not going to have a full-fledged career then you should be saving to create a corpus for the period of uncertainty. Paying high EMIs now will not allow you to save up. Besides, you have also stated that you do not know where your next career location will be. Unless you are clear about where you will work for the next 15-20 years, don’t rush into a buying a house now. A loan is a risk if you do not plan on a full-fledged job that will help you pay the EMI comfortably. Use the ₹15,000 per month on additional saving to build a corpus that you will need when you are between jobs.

( The author is a personal finance expert. )

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