I’m 30 and have started investing in mutual funds (MFs) last year. But I have over-invested; I am hardly left with any savings. What is the ideal ratio of income-to-MF investment? I’m married and earn Rs.60,000 per month. My monthly investments are around Rs.28,000 and expenses are around Rs.23,000.
—Rajyashree Basu
There is no hard and fast rule for this. The most preferred advice is that invest as much money as you can comfortably invest every month in a regular and non-stop manner. Usually, it is about 20% of income or about 50% of regular savings. Applying this to you, we can see that given monthly savings of about Rs.37,000, a monthly investment of about Rs.15,000 would be a fair ask. This would work out to about 25% of your income, which is also good.
Another way to approach this would be to address your concern that you are hardly left with any savings. This can only happen when you do not have a emergency fund. So, you might want to save up about Rs.3 lakh (5 months’ salary) for such a purpose.
What are passive funds? How risky are they?
—Suresh Sinha
Passive funds invest in stocks of a market index by duplicating them in their entirety. Because they are merely duplicating the index without doing an ‘active’ management of the portfolio, they are termed as passive funds. They are mostly available in the form of exchange-traded funds (ETFs) in the market.
