A large number of new investors are joining the equity market each month, driven by their buoyancy. Here is a roadmap for these new investors to make a safe and smooth entry into the markets.
Create an emergency corpus: The purpose of this fund is to ensure that, in the event of an emergency, you do not have to dip into your longterm investments and disrupt their compounding. Accumulate funds equivalent to at least six months of monthly expenses. This money can be accumulated through a SIP in a liquid fund.
Medium-term corpus: Most younger people have a few near- to medium-term goals for which they should save separately. For example, they may want to buy a car or make a down payment for a house. They should accumulate money for these goals separately by starting an SIP in a short-term debt fund.
Long-term corpus: This is for truly long-term goals that are 15-20 years or more away, such as one’s own retirement, children’s education and marriage. For these goals, they may allocate as much as 80-90 per cent to equities, depending on their risk appetite.
Ideally, the first equity fund should be a largecap passive index fund, based on the Nifty or the Sensex. Stick to this fund for the first couple of years to get accustomed to the volatility of equities. Thereafter, consider moving to a slightly more diversified index, such as the Nifty Large and Midcap Index.
After a couple more years, consider investing in active funds. It is important to diversify across investment styles, such as value, quality, mid- and small-cap, momentum, and growth.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Thematic Fund Or Sectoral Fund, Which Fund Suits You?
A thematic fund is a type of mutual fund that focuses on investing in companies based on specific themes or trends.
Be Kind To Your Kidneys
The kidney is a vital organ in our body which is four inches long and two and a half inches in width.
Have You Included A Passive Fund In Your Portfolio Yet?
The assets under management (AUM) of passive funds recently crossed the Rs. 10 lakh mark. While a significant portion of this money comes from institutional investors, such as the Employees Provident Fund Organisation (EPFO), these funds are also gaining popularity among retail investors.
Mutual Fund
1. SEBI allows mutual funds to buy and sell credit default swaps (CDS)
Insurance News
1. The finance minister has launched a new NPS scheme named NPS Vatsalya
ASK THE EXPERT
Dear Sir, I attended your webinar on post-retirement financial planning. As advised by your good self, I invested in NPS after retirement.
Market Mystery: Some Important Investing Lessons from Fund Managers Themselves
Mr. Mahesh Patil is the Chief Investment Officer (CIO) of Aditya Birla Sun Life AMC Limited. As the CIO Mahesh oversees INR 3 lakh crore of assets under management.
How to make a cautious entry into equity funds during a bull market
The number of mutual fund folios has been rising, with flows via the systematic investment plan (SIP) route reaching new highs.
All that you need to know to kickstart your retirement planning process
We all enjoy planning for the future. It’s a good idea to plan ahead of time for anything, from the day’s activities to a vacation.
5 Steps To Achieve Your Financial Goals
From a beach house, a Jaguar, to traveling the world – there are many things in life that we want to accomplish.