Raj Khosla, Founder and Managing Director, MyMoneyMantra.com replies: Amid this pandemic, utilizing surplus funds to partially or totally prepay excellent liabilities is beneficial. Don’t compromise your liquidity for speculative investments in actual property. As annual rental yields usually are not greater than 2%, it isn’t sensible to begin one other EMI with an ongoing mortgage. It could take years for property costs to understand. Due to this fact, it is best to first minimize down your month-to-month EMIs, and align the excess Rs 40,000 per 30 days in direction of a mixture of short-term liquid funds or financial institution FDs and long-term fairness funds, foundation your targets and threat urge for food. Care for your money circulate necessities within the brief, medium and long run as opposed to buying a property for rental earnings, that too with borrowed funds. Be certain that you maintain enough life and medical insurance covers for your self and household, together with emergency funds.
I’m 41 and personal a home with zero debt. My job pays properly. My investments embrace FDs price Rs 80 lakh, company and gold bonds, PF round Rs 57 lakh, PPF of Rs 30 lakh, NSC price Rs 20 lakh, NPS of Rs 25 lakh, SSAs price Rs 15 lakh. I’ve been investing in mutual funds by means of SIPS (Mirae Asset Rising Bluechip, Axis Small Cap, SBI Small Cap, L&T Rising Enterprise Fund, Nippon India Small Cap and a few large-cap and balanced funds as properly) and my corpus is price Rs 42 lakh. I’ve adequate well being and time period insurance coverage. I don’t plan to purchase one other home for the subsequent 2-3 years and wish to de-risk or dilute round Rs 10 lakh-12 lakh of my investments in FDs and reinvest them. I wish to do that with an intent for wealth creation or funding my 10-year-old youngster’s schooling. Are you able to counsel a couple of choices?
Naveen Kukreja, CEO and Co-Founder, Paisabazaar.com replies: A significant chunk of your mutual fund publicity is in small-cap funds. I counsel you make investments your FD redemption proceeds in debt funds after which shift systematically to flexi-cap and large-cap funds. Debt funds are extra tax-efficient than FDs. You possibly can unfold your investments equally amongst these funds —Tata Index Sensex or HDFC Index Sensex Fund; Parag Parikh Flexi Cap or Axis Flexicap Fund. In case you want to contemplate ELSS funds to scale back your earnings tax legal responsibility beneath Part 80C, you may spend money on the direct plans of Mirae Asset Tax Saver and/or Axis Lengthy Time period Fairness Fund by means of SIPs. Given your earnings and age profile, your present fairness publicity of 16-22% of the overall funding portfolio is simply too low.
Shifting the FD proceeds of Rs 10-12 lakh in fairness funds will improve the fairness allocation to 20-25%. Therefore, I’ll counsel you to additional improve your fairness publicity to not less than 50% of your whole portfolio after setting apart your fixed-income investments on your emergency fund and numerous short-term monetary targets. Then, unfold your fairness investments amongst giant, mid-cap and small-cap within the ratio of 40:40:20. Attempt to keep invested in fairness mutual funds for not less than 5 years.