How to invest across various stages of life?

Hello Codecritic Readers,

Continuing with my guest posts, i am writing down my second article to Codecritic’s audience.

Age does play an important role in building a portfolio for an individual. As you grow you should start realizing or start reap in the benefits of your well planned investments. Let us classify the investors broadly into three categories.

Aggressive Youth(21-30)

This is the time when one should have vigor and aggression in investments. The Portfolio should be tilted towards more equity allocation than the debt instruments. Still , one should plan for his/her retirement right from the first month when he/she receives the pay cheque. Earlier you start better is your future retired life.

Allocation %age

Equity – 75 %
Debt – 25 %

The Debt instruments can be chosen from PPF, NSC, Pension funds. For Pension funds its better to avoid schemes offered by the insurance companies. There are better schemes available in the MF arena like Templeton India Pension Plan. As your age approaches 30, you should gradually shifts your investments towards a better balanced portfolio of funds.

Responsible Familymen(31-50)

As the number of dependents on you grows up, it make more sense to add more stability to your portfolio by adding more debt/balanced funds. This move also reduces the volatility of the portfolio as a whole.

Allocation %age

Equity – 50-60%
Debt – 40-50 %

The Debt part can comprise of MIP (Monthly Income Plans), Pension Funds, Liquid Funds, FMP (Fixed Maturity plans). The Equity part should contain less exposure to thematic funds and more allocation to conservative funds like Balanced Funds.

Retired Life (> 50 years)

The best way to enjoy the retired life is to spend the money accumulated over time. Spending not in a lavishing way but in a more satisfying manner. Its easier said than done. ACCUMULATION of wealth is not that easy but once your are true that hardship stage, then you are surely there to enjoy your retired life. Monthly Income Plans are the best way to get constant source of income after your retire. For eg., 1,00,00,000 invested in HDFC Long term MIP will fetch your 60k per month if u had opted for the monthly dividend option. Many can accumulate more than 1 crore in 30 years for sure if planned sensibly in the early stages. You can also park in good equity funds in dividend options. Reliance vision for instance has been constantly giving dividend > 75 % for the last 5 years.

Happy Investing!!!