I have been asked most of the times
where should I invest (young friends and colleagues)? Typically I always
mention consistent performing and good quality equity mutual funds to many of
my friends. They have some surplus funds which they want to invest. I recommend
doing a SIP, just like a regular recurring deposit. If one doesn’t have time or
skill to invest on their own, this often provides decent returns. It has worked
for me.
However, many friends will first
jump on investments without looking at their own security. Insurance before
investments philosophy has to be imbibed. Most of the people should do that.
First, buying a term plan from LIC / HDFC / ICICI (for around 50 L – premium should
be around 7000 for a 25-30 old guy). They need to understand that insurance is
not investment and it has to be treated separately. The concept of not getting
back the money is unheard of. They need to be aware of the fact that insurance
is not for them but for the security of his dependents incase any eventuality
occurs and it has to meet their current standard of living.
Similarly, it is necessary to
spend on their health plans / mediclaim (around 5 lakh atleast as of today –
premium of around 10000) to cover their hospital and medical bills in case one
is hospitalized. It wont then put any stress on the persons savings and
investments.
So overall if one is ready
(generally) to spend around ~1400 monthly (for securing himself first) and as
the earnings grow, he then starts doing a SIP in a good equity MF. That’s how
normal progression should ideally happen.
