Money makes the world go round… or at least it seems to. Many will argue that just earning money isn’t enough, one has to grow it. For women especially, money management has never been more important than it is today. We’re becoming more driven and independent, and our finances have a giant part to play. Whether your salary has a couple zeros or many of them, learning how to manage and grow your wealth is important, but unfortunately, many of us don’t know where to begin (now, wouldn’t teaching us about bank rates been more beneficial than home science?). To learn more about this and finally start our journey towards becoming our own sugar-daddy, we invited Yogita Dand, Founder of Svarasa & Certified Financial Planner to host an Ask Me Anything session on the Girl Tribe by MissMalini App and answer questions you had about smart financial planning. Here the are, answered:
1. How can one select which Mutual Fund to invest in and what should be the ideal monthly amount for it?
First, define your goal and time horizon. If your time horizon is three to five years, then you should go in for a mix of equity and debt fund commonly known as hybrid funds. Anything beyond 5 years should be in diversified equity mutual funds. A lot of things go into selection of a fund: the people, process, profits, performance and the parent company. Never decide on a fund based on performance alone. If you have never invested in mutual funds earlier, start with the minimum amount possible and then slowly increase once you get comfortable.
2. Is investing in gold bonds sensible in the current times?
As financial planners we generally advise people to invest at least 10% of their portfolio in gold by way of gold bonds or gold ETFs (exchange traded funds). This acts as a hedge in case of any eventuality like a war or a pandemic, like this one. So yes gold bonds do make sense in current times too, but only up to 10% of your portfolio!
3. Is long-term locking in financial planning advisable?
Financial planning is all about investing as per your goals, time period and risk appetite. So if you are looking at your retirement which is 25 years away, then it is better to lock-in your investments but if your goal is to buy a car within three years, then you cannot afford to lock-in your investment. It all depends on your goals!
4. Should I be investing in crypto-currency?
The issue with this is that crypto-currency is not recognised as a legal investment in our country and is very volatile. In fact, if you have noted it crashed to nearly 50% in the last few days. Having said that, if you are willing to take a risk and have excess money that you can afford to lose, then you can invest in it through platforms like Wazirx or Zebpay. I do not advise timing any of your investments as you may end up losing money.
5. What is a safe investment strategy for someone who just started earning?
If you have just started earning, ensure that you have an emergency fund for at least six to eight months of your expenses in a fixed deposit or liquid fund. Have sufficient medical insurance or mediclaim and then start investing systematically in equity mutual funds and direct equity.
6. How can I protect my finances as a soon-to-be married woman?
I’d say have a joint account only for your common expenses and keep your personal account running for yours. And always save for a rainy day in your own personal account! While pre-nups are very rare in our country, I would recommend getting them. You always need to guarantee your safety in event of any emergency.
7. What is the best SIP investment for a student?
If you are a student and just starting off, invest in a diversified equity fund or a large cap fund just to get a feel of the market and the working of the mutual funds. You can then graduate to riskier funds when you are ready for it!
8. What investments can I make to take care of my parents in their retirement and old-age?
If you are planning to invest your parents money for their retirement, then first and foremost secure their investments in the Government Senior Citizens Savings Scheme which currently offers 7.40% yearly, payable quarterly and has a lock-in period of five years, with a maximum limit of 15 lakh rupees per person. You can also opt for hybrid mutual funds for them. If you are planning to invest for them with your own money, then I suggest ensure you have a hefty mediclaim policy first, for both of them. Post that, you can start investing in mutual funds, which you can liquidate in case of need.
Do you have any question related to smart financial planning? Share it with us in the comments below, or better yet, join the conversation on the Girl Tribe By MissMalini App!