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I am pursuing MBA along with my job and I want to start investing in the market. Please guide me with the benefits of starting SIPs in mutual funds for long term planning.
- Mahiman
Start with setting aside a certain amount for emergency purposes from your monthly salary. You can keep this amount either in a bank or in a liquid fund. You can invest the rest of the amount in equity linked funds but make sure that you do not require this money for a minimum of five years. For first time investors, the aggressive hybrid fund is a must. In this fund, two-third of your money is invested in equity and the rest in fixed income. This makes sure that in times of a fall in the market, the first time investor to a certain extent feels secured. It is very important for every investor to stick to their investments in a disciplined manner and not get carried away by volatility.
If you are a tax paying investor then instead of an aggressive hybrid fund, annually invest Rs 1.5 lakh in a ELSS fund. These funds come with a lock-in of three years and you completely stay invested in equity. An ELSS fund will also give you a better return over the aggressive hybrid fund.
This article was originally published on February 19, 2019.
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