Want to reduce your loan burden? To begin with, close all high-cost loans. These would typically include all the loans you have taken on your credit card, for your car or any other personal loans. Also rid your portfolio of all dormant savings account and under-performing stocks and mutual funds. Liquidate them. Remember this critical step for an almost debt-free life: If you can’t repay your home loan fully, repay part of it and talk to your lender about lower EMIs.
The rule of 72
It’s simple math magic that makes your investment decisions easy and light. The rule of 72 is a handy calculation that gives you an idea of the time it would take your money to double in value—divide your investment’s annual return by 72, and the result is the number of years it would take for the money to double. For example, you invest Rs100 and get 5% interest. Divide it by 72. In this case, it would take you 14.4 years to turn your Rs100 into Rs200.
Is the time right?
With the residential property sector being one of the hardest hit, experts say this is the best time to take those baby steps to realizing your dream of buying your home. But given the risks attached with the realty sector, experts say it makes sense to opt for a ready-to-move-in property rather than scout for an under-construction project that would obviously be cheaper. Say no to any project that would take six months or more for completion.
Ways to a perfect portfolio
If you are looking for that perfect portfolio, keep in mind that you need to focus on a few core holdings. These could be plain vanilla diversified equity, preferably large-cap, funds with a proven track record. The supporting funds could be thematic, sector or mid-cap funds. Since they are more volatile and their performance is also dependent on the fortunes of a particular sector or theme, the risk in such investments is higher.