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Choosing Investments

Your choice of investment product should be based on your requirements & goals…

I am 30, married and have two financial dependents. I have sufficient insurance cover and have chosen mutual funds as investment tools to build my retirement corpus. Should I have any other instruments like PPF, NPS, Bank FD's to build the corpus or just mutual funds are enough?
- Arun Basavarajappa

Life insurance is risk protection and a necessity if you have financial dependents to take care of their financial future in case of any eventualities. Having adequate life insurance takes care of the base of your financial future. As for your investments to take care of your retirement; there are many options that exist such as mutual funds, PPF, NPS, Bank fixed deposits, NSC and more. Some of these have tax benefits at the time of investment or at the time of maturity or even both. Your choice of products should be based on your requirement and not the availability of products. For instance, a PPF is an assured return tax saving product with a 15-year lock-in, whereas a bank fixed deposit offers tax deduction only when the deposit is for five years. Moreover, mutual funds can be equity or debt-oriented with varying debt-equity ratios; one needs to understand such intricacies with investment products before considering investing in them.

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