Invest in equities for your medium-long term goals!

By | April 13, 2011

Investing in equities to finance your medium or long term goals is advised because by saving a nominal amount you can get better returns.  Moreover, they provide you with a tax edge, if the markets do well, then it can increase your chances of getting a better house than what you actually planned for.

In case of short term goals, due to the decreased liquidity options, it is not advised to save funds in the equities with a long term tenor. FDs, SB accounts, sweep in accounts etc., can be opted in such cases.

In order to take advantage of such bullish market conditions, you need to save religiously. If in case the markets seem to slope down, try not to make it a matter of concern since they will bounce back to normalcy over the years.

Investment pattern:

Start by saving into SIPs and Mutual Funds. See that your portfolio does not have more than 5 mutual funds in the equities sector. Diversified, large-cap, mid-cap, hybrid and tax-saving are the categories where your investments should be directed.

Open a Public Provident Fund account. See to that you contribute a maximum of Rs70, 000 annually. Gold ETFs are a good hedge against inflation and your exposure to equity. But limit it to 5-10% of your portfolio. Bear in mind that it is unlikely for gold to deliver the same returns in the future.

Once you have a good mix of these financial assets, do take a life cover. The policy value should be adequate enough to cover your health care needs and if in case you have home loan or any loan amount pending, the policy should be able to cover that as well. Having a term plan of close to four times your total income is much preferred.

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