I am employed as a manager with a multinational company in Ahmedabad and my salary is Rs 55,000 per month. My husband and other family members are into family business and so I don’t pay anything towards household expenses. We bought a piece of land a couple of years ago. I invest Rs 70,000 in Public Provident Fund (PPF) and Rs 25,000 in LIC policy annually for tax savings. Rest of my income is accumulated in savings bank account. Please suggest good investment options for retirement and child’s future.
You have a good potential to save. As all your household expenses are taken care by your family, all you need to do is to provide for your children’s future and plan for your retirement.
Assuming both these needs are long term, your asset allocation should be skewed more towards equity. And already the exposure towards debt is taken care by your investment in PPF and LIC policy. Start investing on a regular monthly basis through systematic investment plan (SIP) in mutual funds. You can select three funds and the said funds can broadly represent the diversified, large-cap and mid-cap sectors. These SIP’s can be started for Rs 10,000 each and are proposed for long term. You can pick funds such as HDFC Equity, Birla Frontline Equity, HDFC Top 200, DSPBR Top 100, Reliance Regular Savings Equity from the diversified and the large-cap stable and IDFC Small and Mid Cap, DSP Small and Mid cap from the mid-caps. Don’t get too much worried in case you see markets correcting. On the contrary this is good for you as this means you are buying at lower valuations. What you should be concerned about is how your fund is doing against the markets and its peers. It will also be prudent if you consider life and health insurance for your family. For life cover, go for a term insurance for both yourself and for your husband and consider mediclaim for your family. This will also ensure that the investments will happen smoothly and will be used for their intended purpose.
Surya Bhatia is a certified financial planner and principal consultant, Asset Managers.
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