I am 27 years old and my take-home salary is Rs1.2 lakh a month. I will get married this year and wish arrange my finances. Till now, I have invested Rs60,000 in ELSS and I have one LIC policy. Post-wedding, my wife and I can save up to Rs90,000 every month. Please suggest some schemes to invest in, build an emergency corpus, get insurance, and other steps. Short-term goals are buying a car, and a vacation abroad and long-term goals are child’s education and my retirement.
—Nandan Prabhakar
You should first put insurances in order. As after marriage you will have responsibility, you should have a term life insurance. You can target to have a life cover of 8-10 times of your annual income. And along with life insurance, also go for health insurance. Once the insurances are in order, start creating a corpus for various goals. The immediate need of funds being your marriage followed by short-term needs of car and vacation. The short-term goal corpus needs to be invested in a secured asset class. Since the marriage goal is immediate, within the year, you can invest for it in an ultra short-term fund, and the money can be used as and when you need the funds for marriage expenses. For your other short-term goals—car and vacation—you can start saving in a short-term debt fund and for part of the goals which are 2-3 years away, also consider equity albeit in a small percentage and then you can consider equity savings fund category, which also brings tax efficiency. Since the long-term goals are really long term—20-25 years away—do look at equity as an asset class to deliver a superior inflation-adjusted return. However, also understand your risk profile, i.e., how much risk you can take, your risk appetite. Do consider mutual funds and create a portfolio mix of large-cap, multi-cap and mid-cap equity funds.
