Can you guide me to a good personal financial planning treatise that I can follow for life? Can you suggest investments that cover my and my family’s needs?
Cartoonist Scott Adams has given some of the best personal finance advice ever. And it fits the bill for your requirement. Following Adam, we advise you to, firstly, make a will. Pay off your credit cards. You must get a term life insurance since you have a family to support. Next come investments for your retirement. These can be made in the mandatory Provident Fund, or the newly launched RGESS funds. You can choose other investments available under section 80C.
Owning a house is a non-negotiable goal. You should buy a house if you want to live in one and you can afford it. Put six months’ expenses in a money market fund. You should be able to liquidate these investments whenever the need arises.
With the leftover money, Adam suggests to invest 70 per cent in an equity fund and 30 per cent in a fixed income fund. However, that’s cumbersome in India, and not very tax-efficient. This split of 70 per cent equity and 30 per cent is precisely what balanced funds offer. So all you have to do is to choose two or three balanced funds and invest in them.