1. As a 25-year young earner, keep your Mutual Fund investment horizon for 35 years, i.e. till your potential earning age of 60.
2. Allocate only your NET SURPLUS money equally into 3 funds for the entire 35 years through weekly/monthly Systematic Investment Plans (SIPs) without any withdrawal.
3. These very long-term funds should be:-
a) An Equity-Linked Saving Scheme (ELSS) fund for tax-saving under Sec 80C (no need to open a Public Provident Fund account - Employees' Provident Fund is ok)
b) A Multicap fund for riding all market cycles
c) A Midcap fund for the futuristic economy
4. A back-of-the-envelope calculation shows that your investment of just Rs.500 per week in each of them, during your 35 years of earning life, will give you a total corpus of Rs. 2.5 crores at the age of 60.
5. Thereafter, you can invest this corpus into a Balanced fund, and activate a weekly Systematic Withdrawal Plan (SWP) of Rs.45,000 from it for the next 30 years of your retired life to meet your retirement expenses.
6. For any short-term goals within 5 years, including contingencies and emergencies, build and maintain a Liquid/Short-term Debt fund with a corpus of 6-8 months expenses.
7. For medium-term goals within 15 years, you can withdraw from the 3 very long-term funds, precondition being that you should have increased their SIP amounts proportionately before 5 years of their expected withdrawal.
8. Ensure that you have an Online Term Insurance Plan for the maximum allowed period in place covering at least 15 years of your annual income, and which you should keep reviewing to buy new ones if your income increases, in tandem with your investment.
9. Buy an Online Individual Basic Health Plan if you are single, or a Family Floater Plan if you are married or expecting to get married.
10. For your dependent parents, buy them a separate suitable health plan, or include them in your company's Group Health Plan if allowed.
2. Allocate only your NET SURPLUS money equally into 3 funds for the entire 35 years through weekly/monthly Systematic Investment Plans (SIPs) without any withdrawal.
3. These very long-term funds should be:-
a) An Equity-Linked Saving Scheme (ELSS) fund for tax-saving under Sec 80C (no need to open a Public Provident Fund account - Employees' Provident Fund is ok)
b) A Multicap fund for riding all market cycles
c) A Midcap fund for the futuristic economy
4. A back-of-the-envelope calculation shows that your investment of just Rs.500 per week in each of them, during your 35 years of earning life, will give you a total corpus of Rs. 2.5 crores at the age of 60.
5. Thereafter, you can invest this corpus into a Balanced fund, and activate a weekly Systematic Withdrawal Plan (SWP) of Rs.45,000 from it for the next 30 years of your retired life to meet your retirement expenses.
6. For any short-term goals within 5 years, including contingencies and emergencies, build and maintain a Liquid/Short-term Debt fund with a corpus of 6-8 months expenses.
7. For medium-term goals within 15 years, you can withdraw from the 3 very long-term funds, precondition being that you should have increased their SIP amounts proportionately before 5 years of their expected withdrawal.
8. Ensure that you have an Online Term Insurance Plan for the maximum allowed period in place covering at least 15 years of your annual income, and which you should keep reviewing to buy new ones if your income increases, in tandem with your investment.
9. Buy an Online Individual Basic Health Plan if you are single, or a Family Floater Plan if you are married or expecting to get married.
10. For your dependent parents, buy them a separate suitable health plan, or include them in your company's Group Health Plan if allowed.