I want to invest Rs 15,000 every month for the next six months and increase the amount to Rs 20,000 thereafter. The goal of my investment is wealth creation. I will get married in 2014. I have no loans and dependants. Suggest some good investment plans.
You need to invest regularly and systematically in equities. It is not very clear whether you want to withdraw funds for your marriage. In case you plan to use some amount for the same, then a part needs to be invested in more secured assets as you may need money in less than three years. You need to have three funds in your portfolio from across categories. From the diversified funds stable, you can pick between HDFC Equity and Fidelity Equity. In the mid-cap category, you can consider IDFC premier Equity and HDFC Midcap Opportunity. Among balanced funds, HDFC Prudence, HDFC Balanced, Canara Robeco Balanced Fund and Birla Sun Life 95 are good picks. Currently, you don’t need any insurance. However, you should consider the same once you get married and have dependants. Term insurance is one of the best way to get yourself insured. Also, make sure you have a medical insurance.
I am 79 years old and want to invest for my granddaughter so that she can get Rs 2.50 lakh after 10 years. How much and where should I invest between January and April next year for the same?
The amount you need invest will depend on how much risk you are ready to take, which in turn will decide the return you can expect from the investment. Assuming an annual return of 10%, you need to invest Rs 1 lakh upfront which will become Rs 2.59 lakh at the end of 10 years. Since you have a long-term horizon, you may consider investing in a balanced fund—a fund which has an equity exposure of more than 65% and the balance is invested in debt instruments. Good options among balanced funds are HDFC Prudence, HDFC Balanced, Canara Robeco Balanced and Birla Sun Life 95. You can invest through a systematic transfer plan (STP). A STP can be done at various intervals such as weekly, fortnightly or monthly. At the preset interval, the money sitting in the debt scheme will move to the designated scheme automatically. However, you need to watch the performance of the scheme, may be once in six months. If you don’t want to evaluate performance of any scheme and also don’t want any credit risk, then consider bank fixed deposits. The interest rates on offer right now are quite attractive. However, keep in mind the taxation part. Interest earned on deposits is taxable at your marginal rate of tax on an accrual basis.
Surya Bhatia is certified financial planner and principal consultant, Asset Managers
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