A. For initiating investment of your lump sum amount available, fulfilling the following is a prerequisite:
1. Term insurance and health insurance.
2. Prepayment of loans to eliminate undesirable interest burden.
3. Clearance of all dues to remain debt-free.
4. Calculation of mandatory and discretionary expenses.
5. Forming an adequate emergency fund.
1. Term insurance and health insurance.
2. Prepayment of loans to eliminate undesirable interest burden.
3. Clearance of all dues to remain debt-free.
4. Calculation of mandatory and discretionary expenses.
5. Forming an adequate emergency fund.
B. Thereafter, out of your balance lump sum amount:
1. Put 13 times of your total expenses in a 2-year sweep-in Fixed Deposit, linked to your savings account, for withdrawing your 1st year's monthly expenses.
2. Put your balance lump sum amount in a short-term debt fund.
3. Select 1-2 good balanced equity mutual funds with growth option, and start a Systematic Transfer Plan to shift regular amounts to these funds every month, completing it in 1 year without any withdrawal.
4. After 1 year, withdraw from them only monthly amounts for meeting your regular income needs, which is tax-free upto Rs.1 lakh annually.
5. Let the balance amount remain invested in these funds for long-term inflation-beating returns.
6. For higher growth, invest half the amount in multi-cap funds, by starting tax-free Systematic Transfer Plans from the balanced funds after 1st year.
7. Complete these Systematic Transfer Plans, without any withdrawals, in 1 year.
8. Withdraw from them only after 5+ years for optimum returns.
1. Put 13 times of your total expenses in a 2-year sweep-in Fixed Deposit, linked to your savings account, for withdrawing your 1st year's monthly expenses.
2. Put your balance lump sum amount in a short-term debt fund.
3. Select 1-2 good balanced equity mutual funds with growth option, and start a Systematic Transfer Plan to shift regular amounts to these funds every month, completing it in 1 year without any withdrawal.
4. After 1 year, withdraw from them only monthly amounts for meeting your regular income needs, which is tax-free upto Rs.1 lakh annually.
5. Let the balance amount remain invested in these funds for long-term inflation-beating returns.
6. For higher growth, invest half the amount in multi-cap funds, by starting tax-free Systematic Transfer Plans from the balanced funds after 1st year.
7. Complete these Systematic Transfer Plans, without any withdrawals, in 1 year.
8. Withdraw from them only after 5+ years for optimum returns.
C. Points to remember during your investment endeavour:
1. Invest in mutual funds through Systematic Transfer Plans and not lump sum.
2. Keep investment income tax-free as far as possible.
3. Reclaim Tax Deducted at Source by your bank during filing of income tax return.
4. Debt funds returns qualify for inflation indexation tax benefits after 3 years.
5. Equity funds returns after 1 year are tax-free upto Rs. 1 lakh annually.
1. Invest in mutual funds through Systematic Transfer Plans and not lump sum.
2. Keep investment income tax-free as far as possible.
3. Reclaim Tax Deducted at Source by your bank during filing of income tax return.
4. Debt funds returns qualify for inflation indexation tax benefits after 3 years.
5. Equity funds returns after 1 year are tax-free upto Rs. 1 lakh annually.