I am 25 and have just started working. I am yet to start my investing journey. Should I wait for the equity markets to correct or should I start systematic investment plans (SIPs) in mutual funds?
—Name withheld on request
There is no better time to start investing. It is very difficult to time the markets and although the markets are due for a correction, it would not be wise to wait further. Also, when it comes to SIPs, there is not much merit in timing the markets.
We would suggest you invest in different mutual fund categories. Large-cap funds, flexi cap funds, multi-cap funds (40-60% of corpus); mid-cap funds (15-30%); and small-cap funds (10-20%).
For large-cap funds, we would suggest you invest in index funds as the outperformance of actively managed large-cap funds has come down substantially. For mid- and small-cap funds, we would suggest you to diversify between 2-3 funds to reduce the dependence on the performance of a single fund manager.
We also advise you to maintain an emergency corpus equivalent to 6 months of your salary/ income. This fund can be kept in Liquid or ultra short mutual funds. If you haven’t already, consider taking medical and life insurance to provide financial protection to your family in case of unfortunate events.
Should I add silver ETFs to my portfolio? What kind of diversification does it offer?
—Name withheld on request
Gold and silver are both precious metals and have very low correlation to other asset classes like equities and debt. Silver has higher industrial demand whereas gold is used in jewellery and for investments. Both, these metals are considered to be good hedges against inflation.
Accordingly, we suggest an investor to have 5-10% investment in precious metals. We suggest investments in gold due to various factors like liquidity, high demand, demand by central banks.
For investment in gold, consider investing through sovereign gold bonds (SGBs) rather than the ETF (exchange traded funds) or the physical route. SGBs offer an interest of 2.5% per annum in addition to the capital appreciation on gold. Additionally, the capital gains are exempt from tax if held till maturity.
Vijay Kuppa is chief executive officer of InCred Money
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
What is the best age to start investing? Regardless of your age, you want to be financially ready to invest as soon as you can. That's because the sooner you begin investing, the more time your money has to grow.
Don't delay. Starting early is crucial in investing, even if you can't invest a lot at first. In a market that has generally gone up more than it's gone down over the years, it's ideal to invest as early as possible. In the long run, your resilience as an investor could matter more than the day you buy your first stock ...
The best time to buy stocks is when the share prices of a given stock are at a low. There is always a chance that they will drop even further, but buying at a low price is significantly safer than buying at a high price where the price of the stock is unlikely to climb much higher.
To help increase the potential benefits of compounding, start investing as soon as possible and automatically reinvest your dividends and other distributions. Read about the power of compounding and the cost of waiting.
Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.
Start investing early and consistently, and have realistic expectations of your investments. You can take a long-term view toward investing without needing to sacrifice your lifestyle. The earlier you start putting money away, the less you'll need to contribute later.
When you're in your 20s, time may be your most valuable asset. Consider saving 10% to 15% of your pre-tax income for retirement, but even if you only have a smaller amount to invest each month, it may still be worth it. Time in the market is key. Get started as soon as you can.
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
Introduction: My name is Velia Krajcik, I am a handsome, clean, lucky, gleaming, magnificent, proud, glorious person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.