• Fixed deposit-linked savings account—to beat money losing its value to inflation and taxes in a 3.5%-a-year savings account.
• Term insurance— about 7-10 times your annual income, to stop your family from feeling the pinch if you suddenly kick the bucket.
• Simple mediclaim insurance— a family floater of at least Rs5 lakh to get that piped music and gourmet cuisine experience, even with the drip in your wrist.
• Employee’s provident fund—maximize to 12% of your basic salary. Check if your company is withholding tax-free benefits due to you.
• Public provident fund—maximize to Rs70,000 a year. Why give up the tax-free government subsidies.
• Nifty BeES or the exchange-traded mutual fund on the Nifty index—your low-cost equity exposure vehicle for long-term wealth creation.
• Gold ETF—5-10% of the portfolio, to hedge against inflation. Of course, gold won’t hurt when your kids are going to tie the knot.
- Monika Halan is a New Delhi- based certified financial planner
Buy low now, reap higher benefits later
Ideally, investing in equity should be for the long term. It has proven to be the best performing asset class if you are in it for long. As markets are cyclical, investing regularly through the lean period is very important as you are able to buy low.