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A Simple Investment Approach

A first-time investor can consider splitting the investable money into bank deposits and mutual funds to benefit from both

I am 40 and have ₹75 lakh to invest for the next 10 years. I am a first time investor and find the assured 9 per cent from the bank very tempting.
- Jay Mazumder

Given your lack of exposure to investments, it may not be a bad idea for you to split your money into two. You can park half of it with the bank fixed deposit, but do so for a shorter period. In case you change your mind to move more money into mutual funds. With the other half, invest in a balanced fund to start with through an SIP. You can follow this investment for a period of six months to a year, to get a hands-on experience of how SIPs work and how balanced fare compared to fixed deposits.

Balanced funds provide capital growth via a mix of equity and debt: blend of growth and safety. The higher equity allocation to the tune of 65 per cent gives these funds the opportunity for high growth, while the debt component provides a cushion when the equity component fails to perform. You can invest in two well rated balanced funds by looking up for them on our website.

The biggest advantage of investing in equity mutual funds is their tax efficiency compared to fixed deposit returns. While you do get the assured 9 per cent return, the return is treated as income and taxed accordingly. In comparison, your gains from diversified equity mutual funds held for more than a year are tax free because long-term capital gains on equity is taxed at zero per cent.

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