Ask US

I’m an avid reader of the Moneywise section. I’m 23 years old and can save up to ₹ 30,000 a month from my salary. What are my investment options in order to maximise wealth within the next 10 years?

Adithya Ravi

First, if you do not have it already, build an emergency corpus of at least six months’ worth of expenses. Top this up from time to time based on the change in your expenses. Starting this early will hold you in good stead in later years when your financial-goal requirements increase. If you do not foresee requiring any part of your planned investment in the next 5-7 years for any purpose such as higher education, you can invest in mutual funds.

Make sure to allocate to both equity and debt funds based on the risk you wish to take. However, keep at least 20% in debt funds. In the equity funds, large-cap index funds are a must-have. Then, add aggressive funds from categories such as flexi-cap, focused, mid-cap, and small-cap. The lower your risk appetite, the lower your allocation should be to highly aggressive and risky funds. Avoid going more than 30-35% allocation to pure mid-cap and small-cap funds. On the debt front, use a mix of short duration, floating rate, and corporate bond funds. Ensure that these funds invest only in top-rated debt instruments.

I am looking to invest in property in 2023/24. I have investments in equity and debt instruments such as bank and corporate FDs, NCDs and tax-free bonds. I wish to use the debt investment for buying. I will be receiving ₹ 1.3 crore in 2022 and ₹ 1 crore in 2023 from maturity proceeds. Where should I park my funds till the deal is done?

Nikhil Gokhale

In your case, what is most important is capital protection and not returns. You can retain a part of the amount in bank deposits – just pick the right tenure based on when you will need the amount. You can also go for government treasury bills, which are short-term instruments of 91-day, 182-day, and 364-day tenures. These auctions come up from time to time and you can invest in these through some brokerages or through the RBI Direct portal. However, you will need to hold these till maturity. Finally, you can park part in liquid funds. Use at least 2-3 funds, based on the amount invested, and pick funds that have large AUMs and low expense ratios.