I am going to stretch my part 1 of the same post a little bit more.
Step 1.
If you are a salaried employee, you would have EPF (employee provident fund).
There is an equal amount (subjected to a limit) that the company also pays.
Max out the EPF option if possible (check your salary and expenses).
Step 2.
Keep some money (max 6 months salary) part in savings and part in liquid funds.
This is your emergency fund
Step 3.
FD, NSC, Debt MF are all great tools for fixed income but its a known fact that equities will outperform in the long run.
Do have a proper mix of asset allocation to:
- Equities
- Fixed MF/FD
- Gold (ETF/physical)
Step 4.
Do get the full tax benefit that you can get. Thats also a saving in some form. (PPF,FD,NSC etc)
Step 5.
As your salary increases, the allotment to the above should also increase.
Step 6.
Monitor your portfolio atleast once or twice in a year.
Step 7.
As you get closer to 50, start moving your equity funds to Post office MIS, FD, Debt MF etc.
This is the time to save your money since retirement is closer.
Invest early and reap the benefits of the power of compounding.
Because of the issues related to EPF (withdrawals and transfers are complex and time consuming); instead of VPF, open up a PPF account and invest in that. That way you are more in control of your own destiny.
ReplyDeleteInvest in MF through the SIP route. Keep monitoring the selected MF's on a periodic 6/12 months to ensure that the returns are at least equal to if not more than the market returns. Invest in a basket of 3-4 mutual funds and ensure that the SIP's are staggered over the course of the month (maybe 1 per week). This way you spread the risk.
Keep increasing the allocation to the SIP's on an annual basis to the extent of the increase in salary %.