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How should I invest my monthly surplus savings?

​​You can put some amount in Fixed Deposits and some amount in equity as well as in debt-oriented mutual funds. Buy an individual health cover with a sum assured of at least Rs 5 lakh.

Nov 04, 2019, 11.16 AM IST
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You must re-balance your portfolio at a later stage after making initial investments.
I am 27 and earn Rs 32,000 a month. I spend Rs 5,500 on rent, send Rs 5,000 to my parents and spend Rs 5,000 towards travel and other expenses. The remaining amount goes into my savings account. I have Rs 1.16 lakh in it now. I have employer-provided health cover of Rs 3 lakh. How should I invest my money?
Raj Khosla Founder and Managing Director, Mymoneymantra.com
replies: Given your age, you should be investing in equity mutual funds via SIPs. Start by monthly investments of Rs 5,000 in Axis Bluechip Fund, Rs 3,000 in DSP Midcap Fund and Rs 2,000 in SBI Small Cap fund. Review and rebalance portfolio annually and hike SIP amount by 10% every year. The remaining Rs 5,000 can be aligned to a mix of risk-free instruments like post office schemes, RDs and PPF. The Rs 1.16 lakh in your savings account should be re-allocated for immediate requirements.

You can put Rs 30,000 in FDs and Rs 70,000 in Franklin India Ultra Short Duration Fund. Buy an individual health cover with a sum assured of Rs 5 lakh.

My gross salary is Rs 95,000 per month. After deducting housing loan EMI and other statutory deductions, my net salary comes to Rs 55,000 per month. Of this, I invest Rs 25,000 in mutual funds through SIPs and Rs 15,000 in recurring deposits. I have been investing in L&T Midcap Fund, SBI Small Cap Fund, Mirae Asset Bluechip Fund, HDFC Midcap Opportunities Fund and ICICI Blue Chip Fund for the past year. At present, all the funds are showing negative returns. I will not need to redeem these funds for at least 4-5 years. Should I continue with the same portfolio or make changes?
Vidya Bala Co-Founder, Redwood Research
replies: It appears you are using RDs for your debt allocation. It is fine except that as your salary increases, you will find this a tax inefficient option. Consider debt funds at a later stage. As for your equity funds, your portfolio is tilted towards mid- and small-cap funds. In falling markets your portfolio will be hurt more. In future, allocate more to multi-cap funds such as Parag Parikh Long Term Equity and Kotak Multi-cap. Stop SIPs in any of the mid-cap funds once you see a proper rally and hold it.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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