If you have come into investing recently and have been subject to many experts, my sincere condolences. It is a jungle out there and there is an alphabet soup of qualifications – all most all well intentioned, presumably!
- first realize that life is a complete package,
- when you are young and drawing your first salary, the biggest asset you have is, your ability to earn well over the next almost 40 years
- If you have a job in the government or even some big old company, your job is like a DEBT fund. Low volatility, maybe not great returns, but that you know best.
- Once you treat your job like a debt fund, remember your wealth creation will happen through Equity. Pick up a few equity funds and start an SIP.
- If you are an employee of a Venture Capital fund / Private Equity advisory fund / Equity broker – your life becomes like an equity fund. In such cases it is necessary for you to start investing in debt funds ALSO. You still need to be 20% in equity funds, and the balance in debt funds. As your salary goes up increase your exposure to private equity, listed equity and equity mutual funds. Remember private equity is high risk and has no liquidity.
- Not all debt is equal – Public provident fund has poor liquidity, but high on safety and is tax free accumulation at 8% – and is a good return. HOWEVER till you turn 50 years of age do not put too much money into the ppf account
- Whether you choose Equity or Debt schemes make sure you opt for the Growth option. In such a mode you pay tax ONLY when you withdraw.
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