Not able to save much at the end of the month? You can still make those investments. We have an investment plan for every budget.
You wanted to start making that Mutual Funds investment this month but ended the month with just about Rs. 10,000 in your Savings Account? Don’t postpone your plans. Start investing in those Mutual Funds through the Systematic Investment Plan (SIP) route at once.
Also, you need to have an investment plan in place to ensure that you reach your financial goals. Goals? Of course! You want your children to study in the best colleges, you want to buy that house using a Home Loan, you are looking to upgrade your car, perhaps with a Car Loan, and you want to have a comfortable retired life. All these ‘goals’ can be achieved only if you invest the right amount at the right time. So, get a plan in place for each of your goals.
Think you don’t have enough to invest in all asset classes? Don’t worry! We have investment plans for every budget. We’ll tell you how to allocate your surplus money in different investments. You can modify this based on how close your goal is. The closer your goal, the more you need to invest in safer avenues such as Fixed Deposits.
We are going to assume that you are an investor who is willing to take moderate risks. Remember, low risk = low returns! We will give you investment plans based on how much you are able to spare for your investments every month. Ready? Read on.
You have less than Rs. 20,000 to invest
Since you have very little to spare, if you want your money to grow quickly you will need to look at investments with higher risks like equity Mutual Funds.
Asset | % Allocation | Expected Returns |
Mutual Funds (SIP) | 50 | 10%-12% per annum |
Fixed Deposits | 50 | 6%-7% per annum |
You have less than less than Rs. 50,000 to invest
Since you are able to save a good sum of money every month, you should consider alternative assets such as gold. You can even consider investing a little every other month in gold. The best way to invest in gold is by buying gold bars or coins.
If you don’t want to invest in physical gold, consider gold Exchange Traded Funds (ETF). These funds give you returns that are in line with physical gold. Also, you could invest directly in stocks if you have enough knowledge. However, it might be best to stick to Mutual Funds if you don’t want to take high risks.
Asset | % Allocation | Expected Returns |
Stocks and/or diversified equity Mutual Funds | 50 | 10%-12% per annum |
Fixed Deposits/Traditional fixed-income investments such as PPF | 20 | 6%-7% per annum |
Debt Mutual Funds | 20 | 7%-8% per annum |
Gold/ Gold-ETF | 10 | 8%-10% per annum |
You have less than Rs. 1,00,000 to invest
If you are able to spare anywhere between Rs. 50,000 and Rs. 1,00,000 every month, you should consider taking higher risks by investing in mid-cap stocks or mid-cap Mutual Funds. This is only if your goals are long-term. For short-term goals (less than 3 years), you should stick to debt investments.
If you have a high-risk appetite, consider going in for sector-specific funds. However, if you have little knowledge, it is best to stick to equity Mutual Funds. Always take the help of a financial advisor when you are going in for high-risk equity investments.
Asset | % Allocation | Expected Returns |
Large-cap stocks/Mutual Funds, Mid-cap Stocks Mutual Funds, Sector specific Mutual Funds | 50 | 10%-12% per annum |
Fixed Deposits/Traditional fixed-income investments such as PPF | 20 | 6%-7% per annum |
Debt Mutual Funds | 20 | 7%-8% per annum |
Gold/ Gold-ETF | 10 | 8%-10% per annum |
You have more than Rs. 1,00,000 to invest
Since you have a substantial amount to spare, start looking at alternative investments such as private equity funds and real estate. However, caution should be exercised as these are high-risk investments and you will need to take the help of financial and legal experts. If you have more than Rs. 25 lakhs as surplus, you could consider Portfolio Management Services (PMS) after you understand the charges and terms and conditions.
Asset | % Allocation | Expected Returns |
Large-cap stocks/Mutual Funds, Mid-cap Stocks Mutual Funds, Sector specific Mutual Funds | 40 | 10%-12% per annum |
Fixed Deposits/Traditional fixed-income investments such as PPF | 20 | 6%-7% per annum |
Debt Mutual Funds | 10 | 7%-8% per annum |
Gold/ Gold-ETF | 10 | 8%-10% per annum |
Private equity/Real estate | 20 |
Cut Down
This is a no-brainer. If you blow up your salary every month without saving anything to achieve your financial goals, you will never be able to achieve any of those goals. In fact, you will not have enough even after retirement. Ideally, you should start saving large proportions of your salary from the very onset of your career. However, it is never too late. Jot down all those expenses, make a budget and try and see where you can cut down your expenses. Getting unwanted expenses out of the way is half the job done.
Lesser Loans
While loans taken for creating assets such as a house are always useful (they give tax breaks), loans taken for discretionary expenses such as a vacation might not be such a good idea. Avoid loans for vacations, shopping and other things that can wait. This will certainly leave you with a larger amount that can be invested every month.
So, whenever you get a chance to pay off your loans, you should. Without a second thought, pay off that high-interest debt in your portfolio. For this, you could use the money received from your bonus or any inheritance money that you might get.
Invest Those Lump Sums
Apart from making monthly investments, you should look at making lump sum investments too. Got a windfall? Make a plan to invest it in good investment avenues. If you have a moderate risk appetite, consider a Systematic Transfer Plan (STP). Here, you can put that lump sum in a debt Mutual Fund that has low risks and systematically transfer it to equity Mutual Funds. This way, you can continue earning money while you transfer funds to equity investments. You also average out the cost of investments.
Save Away
Just like you pay your EMIs for those loans every month, you should automate the savings and investments that you make every month. By doing this, you will never forget to invest. You can do this by opening Recurring Deposits or making investments using SIP. SIPs in equity funds tend to give higher returns than lump sum investments in the long run. Want to start investing right away? Don’t wait!
Originally posted at: https://blog.bankbazaar.com/ridiculously-easy-investment-plans-every-budget/
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