As prudent investors, it is very important for you to invest rigorously as you start earning. For example, if you manage to land into a job at the age of 25 and are receiving a take home of Rs20-25k per month, try to invest as much as 40% of your income. Only then you will be in a position to procure more benefits by the time you reach your 40s and have a family who needs need to be catered.
The main reason why investing and savings is encouraged is because, morally, this will not only help you but also your family tremendously when it comes to fulfilling any financial requirements. Just imagine the lightness you would feel if you had the amount necessary for financing any requirement say your child’s college education of Rs10 lakh after about investing for 15-20 years. And financially, it will avert you from the burden of applying for any debts like personal loans, home loans etc, to fulfill your financial requirement.
One of the main reasons as to how you can achieve a healthy portfolio is to list out all your financial requirements and link each requirement with an investment. Once that is done, make sure you invest for funding your post retirement life. After that, try getting first hand information from credible sources, like a financial advisor as to where and how much you need to invest your funds into. As mentioned above, try to invest about 40% of your earnings. If you are young and are a bachelor, this is the best time to do all that you can only for yourself so that your married life can run smoothly since you will manage to cater to all the financial requirements that come along with it. Make sure that you invest in Mutual Funds using the SIP route.
Once you have managed to build a good portfolio, wherein all your stocks are performing well and are robust in various market cycles, consider diversifying your portfolio. Diversifying basically means to broaden and increase your risk appetite without pushing you to limits where you are on the verge of bankruptcy. Opting for Personal loans, car loans etc is not the reason for which you started to invest on the first hand. Make sure you understand and have received all the information pertaining to the fund’s behavior and the degree of profitability it can give you if you try opting for them. Only when you are sure of this information consider investing in them.
Exchange traded funds (ETFs) are a good option to consider if you are interested in investing in Gold. However restrict your investment in this to only 5% of your total portfolio amount. Opting for direct stocks is not usually advisable since you need to ensure that you watch the markets keenly on a daily basis which may not be possible if you’re an employed individual. That is the reason as to why Mutual Funds are preferred since their performance can be tracked at the end of each year showcasing the returns generated at the end of your investment tenor.
If you have any Ulips, consider the costs, surrender charges etc and try to redeem the rest and opt out of them as soon as possible. Try buying a pure insurance cover and not an insurance which depends on the market performance. It may not work positively at all times.
Try to build a portfolio that can help you finance your requirements after a period of 10-15 years, essentially factoring the inflation rate. A good portfolio is that where your returns are not compromised just because you ignored to factor in the inflation.