i’m selling Property would like to do more Investment Around Rs 40-50 lakh, which I don’t need for the next five years. I am investing it for my retirement. Which are the best investment options available and what should be the asset allocation? I don’t want to take too much risk.
Raj Khosla, Founder and Managing Director of MyMoneyMantra.com replied: It is prudent to invest the surplus amount in a mix of debt and share Mutual Funds as per your goals, investment time frame and risk appetite. You should stick with 60:40 equity to debt ratio with moderate risk appetite. After estimating the sale of assets and capital gains taxes on the property, invest the lump sum amount in a liquid fund and initiate a Systematic Transfer Plan (STP) of Rs 10,000 in Axis Bluechip Fund, Kotak Bluechip Fund, UTI Flexi Cap Fund, Invesco . India Multi Cap Fund and Mirae Asset Emerging Bluechip Fund for 60 months. Review and rebalance your portfolio every 3 years. In case of any tax liability arising out of sale of assets, please discuss with the tax advisor and reduce the tax burden by investing in 54EC bonds. You must also ensure adequate health and life insurance; and emergency fund up to Rs 10 lakh in guaranteed return products with easy liquidity like bank fixed deposits.
I want to buy property in 2023-24. I have investments in equity and debt instruments like fixed deposits, NCDs and tax-free bonds in banks and private companies. I want to use the loan investment for the purchase. I will receive Rs 1.3 crore in 2022 and Rs 1 crore in 2023 from the maturity amount. Where should I put my funds until the deal is done?
Praleen Bajpayee Founder Finfix® Research & Analytics replies: Since money is required to buy assets, conservation of capital is important. In addition, the investment period will be short so access to the amount will be required. If we take into account all these factors along with taxation, then arbitrage funds stand out as a viable option. Arbitrage funds take advantage of price differences in the cash and derivatives markets to generate returns. The difference between the price of the same security in two markets is the fund’s profit, excluding other costs. These funds are generally less risky because each security is bought and sold simultaneously. Gains are taxed at 15% if the fund is redeemed within a year, while gains above Rs 1 lakh are taxed at 10% if redeemed after a year. You can also consider short tenure fixed deposits and debt funds.
My 25 year old son started working two years ago. He can save Rs 1 lakh every month. He has Rs 5 lakh in his savings bank account. He has invested Rs 1.5 lakh annually in PPF and Rs 50,000 in NPS for the last two years. He is investing Rs 5,000 per month through SIP in HDFC Sensex Plan, Rs 12,500 in ICICI Pru US Bluechip Equity and Rs 12,500 in Axis Blue Chip Fund. How should they invest Rs 5 lakh lying in their bank account? Where can he invest the remaining investible surplus every month?
Nitin Shanbhag Working Group VP- Motilal Oswal Private Wealth Answers: Your son has to decide how much he wants to allocate in equity. The domestic equity market is backed by strong fundamentals, which is likely to continue further. Since he can save Rs 1 lakh per month, he can take higher allocation of 70-80% of his total portfolio in equities as he is quite small. Rs 5 lakh lying in their savings bank account can also be transferred to equity funds. We would suggest to deploy 50% (Rs 2.5 lakh) immediately and the remaining Rs 2.5 lakh in equal installments over the next 3 months. Since he already has two large-cap funds as well as a US focused fund; We would suggest a combination of multi-cap funds like HDFC Capital Builder Fund, ICICI India Opportunities Fund and Kotak Equity Opportunities Fund. For the Rs 1 lakh that he saves per month, he can decide how much to invest in equities and then invest in the multi-cap funds mentioned above, and invest the rest in fixed-income passive funds Portfolio with a roll-down strategy that has a high quality.