Skip to main content

Building portfolio - Basics

 

   Savings and investments are the basic steps in an individual's financial planning process. There are various options available in the market, and it is very important to plan and select the right investment instruments in order to get the best returns. It is advisable to start saving and investing as early as possible. It is also very important to allocate some of your time to planning and tracking your existing and planned investments. You cannot have all you plan for in your investment portfolio on day one - you need to build the portfolio slowly over time, and focus on diversification of instruments too.


   The first step is to identify your objectives. The objectives can be simply classified as short-term needs such as tax saving, insurance, buying some asset etc, and long-term needs such as a property, marriage, children's education, retirement etc. The next step is to identify your risk appetite, which is basically your capacity to bear loss on investments. Risk appetite is unique to each investor as it depends on various personal factors such as age, stability in earnings, financial background of the family etc.


   These are some of the broad categories of investment instruments that are available in the markets:

Tax-saving instruments    

It is important to plan to reduce your tax liability. The Income Tax Act specifies certain investment instruments that attract a rebate in income tax. For example, provident fund, NSC, infrastructure funds etc. However, most of these tax-saving instruments come with a long lock-in period. You can choose some of these tax-saving instruments to invest in.


   Investors with a low risk appetite can invest in debt based instruments like PPF, NSC etc, while investors with a high risk appetite can invest in a mix of tax saving mutual funds, PPF, NSC etc.

Insurance instruments    

It is important for everyone to have an adequate insurance cover on life and health. Analysts suggest an investor should have an insurance cover that is at least 5-8 times his annual income. On the other hand, you should have adequate medical cover as well for yourself and your immediate family members.


   Insurance schemes taken at a lower age come with lower premiums and therefore it is advisable to go in for adequate insurance cover during the early part of one's earning years. Unit linked insurance plans (ULIPs) are a good option to bundle one's investment and insurance needs.

Liquid and debt instruments    

Debt-based investment instruments are 'low risk and low returns' options, and provide for capital protection. Debt instruments are good for short and medium-term investment plans where investors are looking for liquidity. You can look at investing in various debt based investment instruments based on your needs.


   Some options are bank savings deposits, bank fixed deposits, debt based mutual funds etc.

Gold    

Investing in gold has gained popularity in recent times due to the lucrative returns. Gold-based investments add another dimension to a portfolio. It acts as a debt instrument and usually provides good returns during uncertain economic conditions. You can look at investing in gold either through the metal itself or through units of gold exchange-traded funds (ETFs).

Equity-based instruments    

You can invest in the equity markets either directly in stocks or through indirect options - equity-based mutual funds. You can identify investment opportunities with some basic analysis. Ideally, only investors who have the time and understanding of markets should look at the direct stock method. Others should look at investments through funds managed by various fund houses.

 

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now