Most of the people often ponder a lot before making investment like where to invest and how much to invest.? What should be balanced type of investment.? How much should be invested to Stocks/mutual funds.? Or what kind of Insurance one should buy.?
So today we are going to discuss, what should be a balanced investment look like if your budget is 2-5 lakhs. And Also, I am going to highlight some of the asset classes to help you determine the optimum mix and how much is too much per investment instrument.
Let’s Start with:-
Most of the people are often confused as to how they should distribute their funds between different types of mutual funds. In my opinion an ideal ratio may look like 4:3:1 mix of equity, debt and liquid funds but you can gradually raise the ratio to 6:3:1.
Majority of Investor go with 4-5 funds which i think is enough for them to manage and it helps to avoid the duplication also.
If you like some more stable investments you can raise your debt funds which provides stability and hedge against volatility but it should be managed for short durations.
Debt maybe the replacement for your fixed deposit and not as a long duration investment. There is thumb rule which should followed here you can fix your investment ration as per your goals and asset allocation.
Also Read:- Why you must Invest in Mutual funds.?
Same as we cut our funds to 4-5 for mutual funds, stocks shouldn’t be a crowd too. Your portfolio should not look like a company’s employee list.In my opinion investment in 8-12 stocks is more than enough. But if your budget is even lower than 2 lakhs, limit your investment to 4 stocks.
Investment in too many stocks wont make your rich but buying truckload of a good stock will. So, go for quality not quantity. limit your portfolio but invest in high amount.
Keep your goals clear, that will help you in choosing stocks.
Unit-linked insurance plans (ULIPs) are fast becoming favorites of the salaried class off late, especially as they are offering tax benefits equivalent to equity funds, comparable returns, and low charges.
Also, ULIPs besides the tax advantage of up to Rs 1.5 lakh under Section 80C can be instrumental for long-term goals. It usually offers a sum of guaranteed equal to 10 times the annual premium for investors below the age of 45.
ULIPs are most of the most attractive wealth creating tools for the long-term because of its diversity of funds offered and they are ideal for everyone who want to start young to equity ride investment.
It gets really important to Note that here systematic asset allocation over different categories of assets is really very important to earn the maximum return in long term.
Also, asset allocation is a dynamic process.
At the end, it’s your decision, But if you distribute your funds in this way there is chance of not losing all your money at once and you can average your profit also. Look, you can’t get profit from every investment you make, in stock market we try to average our profit, earning profit in some and making losses in few. Thats the process, you need to follow.
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