I am 29 years old, married and have a two-year-old daughter. I plan to start a systematic investment plan for a five-plus years time frame and invest Rs 20,000 per month. I am looking for healthy returns and can take the required risk. Please suggest a portfolio for me.
For a profile such as yours, seeking an aggressive portfolio for a five year-plus time frame, we would recommend a 80% equity-heavy portfolio. A 20% debt exposure would bring some stability to the portfolio and might enhance the returns. For equities, we’d split the investment across market caps with a bulk of allocation to large-cap funds, with a healthy dose of small/mid-cap funds as well. So overall our asset allocation plan would be 50% large/multi-cap funds, 30% small/mid-cap funds and 20% income funds. For a Rs 20,000 per month investment, the allocation would be Rs 10,000 in the large/multi-cap funds, Rs 6,000 in small/mid-cap funds and Rs 4,000 in income funds.
Regarding schemes, our recommendations would be Birla Sun Life Frontline Equity, Fidelity Equity fund in large/multi-cap category; Birla Sun Life Mid Cap, DSP BlackRock Small and mid-cap in small/mid-cap category; and Templeton India Short-term Income Retail in income category. Overall this would be a stable portfolio that will aim to seek higher returns while maintaining a core of market-based funds.
I am 59 years old and on the verge of retirement. I work for a private company and have not planned my retirement properly. However, I have set aside a few lakhs in Post Office Monthly Income Scheme. I have also invested Rs 50,000 in four monthly income schemes. Give me some financial guidance.
Before we talk about investment options for your savings, we need to ensure two things—first, you need to have a good healthcare policy to make sure that any illness can be handled without too much financial strain. Second, set aside some emergency fund (say, the equivalent of about three months of expenses) to handle unforeseen circumstances.
Once these are taken care of, we can turn to your investment options. In a year from now, you will be eligible to invest in the Senior Citizen Savings Scheme that provides 9% annual interest (payable quarterly) for your investment (upto Rs 15 lakh). It can be the cornerstone of your portfolio. Beyond that, you can invest in other top rated corporate deposit products that yield higher interests. A portion (say 10-20%) of your portfolio should also be exposed to well diversified equity funds so that overall returns keeps up with the inflation rate. For this, you should also look out for inflation-indexed bonds, proposed by the Reserve Bank of India, as an option in the future.
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