Smart investing: align your investments with your financial goals


Go for a judicious mixture of investments across asset classes like equity, debt, and gold to attain your financial goals as the exchange indicators Sensex and Nifty touch new highs daily, many investors are tempted to divert their surplus funds towards equity or equity-based mutual funds.

Investors shouldn’t allocate their investments in a much-skewed manner. Allow us to study some such asset classes intimately. Investment goal and asset class. When investors wish to carry the investment for a fairly longer holding period say three to 5 years, investing in equity or through equity mutual funds fits the bill perfectly.

For brief to medium term i.e., between one to 3 years, it’s good to settle on debt or debt-oriented funds. Investors who wish to form a tax-free corpus and also want stable returns mustn’t miss out on Public Provident Fund (PPF) and gold.

Public Provident Fund (PPF) is a time-tested investment one must have as a component of meeting long-term goals like retirement. As PPF is long duration naturally (15 years), the impact of compounding tax-free interest is critical especially within the later part of maturity.

Currently, the rate of interest offered stands at 7.1% each year compounded annually. As both the principal and interest earned are backed by sovereign guarantees, it’s one of the safest investments. National Pension Scheme NPS may be a long-term, retirement-focused investment product.

The contribution made towards NPS goes into a combination of equity, corporate bonds, liquid funds, fixed deposits, government bonds among others. As an investor one can decide what quantity to contribute to equities through NPS.

The advantage of investing in NPS is that on retirement, you’ll be able to draw up to 60% as tax-free from the corpus, and also the balance of 40% is payable as an annuity for the lifetime.

Equity mutual funds Investing in equity-based mutual funds is that the easiest choice to get exposure in equity shares. As mentioned earlier, equity funds are the most effective investment vehicle to fulfill your long-term goals. Consider investing in equity mutual funds through a scientific investment plan (SIP).

While investing in equity-based mutual funds, select a large-cap fund together with exposure to mid-cap schemes too. Sovereign Gold Bonds. The government of India launched a series of Sovereign Gold Bond (SGB) schemes for investors who wish to take a position in gold.

SGB provides a chance to earn interest also on its gold. The rate of interest on these bonds is 2.5% every year payable biannually. As an investment, SGBs are far better than owning physical gold.

To conclude, before investing in any of those you must have an adequate emergency fund to show to just in case of any financial emergencies and so earmark income towards

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