I am 25 and my monthly income is Rs 40,000. I invest Rs 11,000 every month.

I buy gold coins for Rs 8,000 and invest Rs 1,500 each (through SIPs) in Reliance Equity Opportunities and DSP BR Microcap. My current balance is Rs 1.5 lakh. Contribution to the tune of Rs 2,000 is done towards VPF. I invest Rs 5,000 in PPF and Rs 20,000 in direct equity, every year.

I have a term insurance policy for Rs 30 lakh with an annual premium of Rs 7,050.

Since my father has retired, I am sharing the monthly expenses of Rs 25,000 with my brother.

Although my brother and I have taken a home loan jointly, he pays the EMI but I want to get the tax benefits. I have taken a personal loan from my employer and have to pay an EMI of Rs 4,000 for the next 9 months. I have a monthly surplus of Rs 3,000.

Is my current investment strategy appropriate, considering my age.

After my marriage, where do you think I should start investing? I wish to invest in real estate projects in my village where land prices are attractive.

— Abhishek Shanbhogue

Correct asset allocation is mandatory irrespective of your age.

Only the proportion allocated to various asset classes will change according to age, risk profile and tenure of the goals.

Your marriage should not influence your investment strategy.

If you want to build a reasonable corpus and also wish to buy a plot in your home town, you should rein in your expenses.

Fix the targets and be reasonable in expenditure without sacrificing too much on lifestyle. This will help you be more consistent in your savings.

Investment strategy

Your investment strategy is too conservative. You are young and draw a reasonable income, therefore you need to have higher exposure to equity rather than being overweight on debt.

You appear to favour tax saving options.

Voluntary PF may be a good option as a part of retirement debt allocation, but it will not provide any liquidity. If you want tax benefits, you can consider investing in equity linked saving schemes.

Once your personal loan is repaid, start investing in equity schemes.

Tax benefits

If you are not contributing to home loan EMI, you are not eligible for tax benefits. You must understand that a co-applicant is not a co-borrower.

I am 25 years old. My parents are working. Each of them earns Rs 50,000 a month and they have 5 years of service left. Out of my monthly income, I save Rs 40,000. I have been investing Rs 15,000 yearly in an LIC endowment policy.

I want to save Rs 3 lakh for my sister's marriage within the next three years.

I also wish to buy a house for Rs 30 lakh after three years and a car for Rs 10 lakh in five years, after marriage.

My parents are pushing me to save in traditional avenues such as PPF, NSC and tax savings bonds.

Based on their suggestion, I am saving Rs 15,000 in a bank RD. They are against investing in shares. I wish to know if it is good to invest in stocks.

Also, I plan to invest some money for retirement. Please let me know where I should do so.

— Pramodh

Investment

While it is not advisable to invest in equities before understanding the dynamics, it is not good to stay away from them either. Investments in equities, spread over the long-term, have the potential to deliver significantly strong returns.

To start with consider investing in mutual funds. You can start an SIP in some mutual fund schemes with a good track record for your retirement. These include funds such as HDFC Equity, Franklin India Bluechip and UTI Opportunities.

A sum of Rs 6,000 a month can become Rs 2 crore in 30 years if these funds fetch return of 12 per cent a year. If you save a higher amount, it can also be utilised for buying a car.

For short-term goal such as your sister's marriage, stick to fixed instruments since they offer good returns and safety.

For buying a house, which is a short-term goal, save Rs 15,000 a month in mutual funds' monthly income plan. Under such schemes, 80 per cent of the investments are made in debt and the rest in equity. With markets at relatively low levels currently, investing in such funds may give returns beyond 10 per cent.

> sureshpartha@thehindu.co.in

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