The Most Authentic Guide on Personal Finance and Investments


Words of Wisdom : "Try to be a rainbow in someone's cloud." ~ Maya Angelou

5 Day-to-day Money Queries from my Readers

Q 1. I want to use the SIP investment plan for our future and our baby's education. I want to take 2  SIP plans with the amount of Rs. 1000 for each for 30 year. Will you please  suggest me in which company we can invest for better return with security of my amount?

Ans 1: Choice of investment depends on the investor's financial profile such as income pattern, investment objectives, risk appetite, assets/liabilities, time frame, etc. Therefore,


i. Assuming you have high risk appetite, you could start with one or two large-cap/diversified equity mutual funds that invest in large companies in India.
ii. Over time, you should build a well-diversified and balanced portfolio of 12-15 funds spread across different types of funds and across different fund houses.
iii. Though the investment will be long term it doesn't mean you should invest and forget. You must review your portfolio once in 6 months and restructure/re-balance it suitably.


Q 2. I'm doing my graduation. Currently i have Rs 5000 and I want to invest in mutual fund and slowly want to build up my portfolio. So how should i start?

Ans 2: Since you are starting your MF investment and assuming you have high risk appetite and you won't need this money for 4-5 years, you should start with one MF that invests in large companies in India i.e. large-cap fund and one MF that invests in mid-sized companies i.e. mid-cap fund.


Q 3. I'm planning to invest around 50000rs per year on my baby name in gold. Please let me know available options.

Ans 3: Gold ETF and e-Gold are ideal options to invest in gold for long term. They enjoy many advantages over buying physical gold.

By the way,
i) What investment is good for you is good for the child too. Therefore, one should not invest in child-specific products or under child's name.

ii) I presume that you are building a well-diversified and balanced portfolio across equity, debt, property and gold (Note: I have not included insurance, because insurance policies do not make a good investment. One should buy "term" policy only for insurance purposes). 


Q 4. I am 25 year old salaried person. I decided to invest in following mutual funds: 
1) ICICI pru discovery fund - monthy 1000
2) Birla sun life divdend fund - monthly 1000
I don't have any other stock shares and MFs. I think these two funds are for short term, But for long term I need my portfolio to have index fund. Please guide to choose a index fund in my portfolio for a long term return. And also suggest which bank has better facility to trade MFs in online.

Ans 4: Kindly note that
i) Equity funds are NEVER for short term. Please don't invest in equity funds unless your time horizon is at least 4-5 years.

ii) Index funds invest only in top 30-50 large companies. However, India is a growing economy. So in future there will be many small and mid-sized companies that will become big. If you stick to just large companies you will miss out on this growth story.

iii) MFs are NOT for "trading" [i.e. short-term] purposes. They are a good "investment" [i.e. long-term] product. (By the way, while equity shares are more suitable for trading, no one has become rich by trading. So my sincere advise would be to avoid being lured by so-called euphoria of trading.)  



Q 5. Pl clear my one doubt, i have a term life insurance policy since last few years , Now recently i under went a small surgery, do i need to intimate to my life insurance company regarding hospitalisation, if yes them why? Policy name iTerm.

Ans 5: It is always advisable to disclose all material facts to the insurer. They issue policy based on various factors. If something is knowingly hidden, then they can even refuse to pay the claim.


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