[ak916]

Originally Posted by Saanil

@I do not think Share market might be good for me because I hardly understand the fine nuances of it. I just do not want to keep the money idle in my account. A friend of mine suggested making a FD of it. I just wanted some suggestions from Bhpians. Is it too early for me to think about such things? Or should I wait for my account balance to grow to some minimum level and them think about such things.

Congratulations on your first salary!

FD is probably not a good option at this age. The low risk options are generally for when you get older and have a family to support. Share market is highly volatile and nobody in this world will know what will happen the next day. However if you are willing to put some time into it, you can start by reading some books/online forums and you might find that it is not too difficult to understand. It is exciting and a good way to lose every single penny you have... or get amazing returns on your money. oh, and Share market is not the same as Gambling

If you want to get into the share market, you could start investing in an SIP with a mutual fund and this will help you understand the markets (provided you are reading books in parallel) till the time you feel like taking the plunge.

The other option is to just increase employee contribution towards PF instead of putting it into an FD because i think you would earn more returns via the PF way and also get tax exemption.

Just my perspective on investing at your age... maybe others have better ideas

[karanraheja]

Congrats Saanil. I would advice you save atleast 2-3 months salary as a back up before starting to invest. In the meantime you can look at options like SIP's , Gold ETF. There is a mutual funds thread , do have a look there . All the best !

[androdev]

after tons of years of working and lot of grey hair, i am still in the same boat as yours, except instead of living with my parents, I live with my wife and kids. as long as you dont buy a car, you will be fine ;-) so you are in an investment-black-hole forum to start with. you have been warned.

on a serious note, I have been repeatedly told if you start SIP into mutual funds in your early twenties, you will be sitting on a big pile of cash by the time you reach early fifties. but i have never overcome the basic doubt: how can this be true if all the wealth mutual funds create over a period of time gets eroded during a crash? (maybe: no risks, no returns)

in any case, SIP into mutual funds is something that should be part of your portfolio at least till you reach a stage where you know you can do better than that.

the other usual suspects are PF, buying proper insurance (health and life) coverage, emergency cash in bank, etc.

welcome to the world of responsibilities and good luck.

This guy's blogs really eye-opening, I felt I should have read when I was much younger!!
http://www.jagoinvestor.com/2011/07/...ce-basics.html

[drdeepudev]

Welcome saanil, it is a jungle out there. I'm in the same boat. The link androdev suggested is quite good. Let me explain my planning. Started working at the age of 23. I have invested my money in gold, when the price was less. Took a life insurance from LIC (on non risky endowment plan) and two mutual funds(HDFC top 200 & HDFC mid cap oppurtunities). Presently I'm nearing 27. Got a family to take care and has car loan of 5 years which ends in the year 2015.
What I suggest is that, being young, you can take up bit risks. You can study about stock exchange, mutual funds etc from the internet. (I mainly rely on moneycontrol.com for the same). Increasing your share in PF is a good option. I may not recommend FD's at your age. Start saving smartly, you will sit up in a pile of money tomorrow. Congrats for your job and salary. So, where is the party?

[Saanil]

Originally Posted by ak916

Congratulations on your first salary!

FD is probably not a good option at this age. The low risk options are generally for when you get older and have a family to support. Share market is highly volatile and nobody in this world will know what will happen the next day.

If you want to get into the share market, you could start investing in an SIP with a mutual fund and this will help you understand the markets (provided you are reading books in parallel) till the time you feel like taking the plunge.

The other option is to just increase employee contribution towards PF instead of putting it into an FD because i think you would earn more returns via the PF way and also get tax exemption.

Just for my knowledge I want to know why is FD not a good option? I mean is it because the return it offers is too low? A couple of my friends also said not to put money in a FD. I just wanted to know why? It is the least risky I suppose.

Well I am in the equity research business (Fundamental analysis) so I am learning quite a lot about companies, balance sheet, Income statement etc. Since I have just started I am still an amatuer but with time I might understand the market better.

Originally Posted by karanraheja

Congrats Saanil. I would advice you save atleast 2-3 months salary as a back up before starting to invest. In the meantime you can look at options like SIP's , Gold ETF. There is a mutual funds thread , do have a look there . All the best !

Thanks for the suggestion. Even I was thinking that I should save more money first. Gold is very high to buy now. I think it will stabilize at this level with little fluctuations. But in the long term I guess it is a good option.

Originally Posted by androdev

after tons of years of working and lot of grey hair, i am still in the same boat as yours, except instead of living with my parents, I live with my wife and kids. as long as you dont buy a car, you will be fine ;-) so you are in an investment-black-hole forum to start with. you have been warned.

on a serious note, I have been repeatedly told if you start SIP into mutual funds in your early twenties, you will be sitting on a big pile of cash by the time you reach early fifties. but i have never overcome the basic doubt: how can this be true if all the wealth mutual funds create over a period of time gets eroded during a crash? (maybe: no risks, no returns)

This guy's blogs really eye-opening, I felt I should have read when I was much younger!!
Personal Finance Basics

Thanks a lot for the link. It explains things in a very simple manner (not a usual thing in finance field).

Originally Posted by drdeepudev

Welcome saanil, it is a jungle out there. I'm in the same boat. The link androdev suggested is quite good. Let me explain my planning. Started working at the age of 23. I have invested my money in gold, when the price was less. Took a life insurance from LIC (on non risky endowment plan) and two mutual funds(HDFC top 200 & HDFC mid cap oppurtunities). Presently I'm nearing 27. Got a family to take care and has car loan of 5 years which ends in the year 2015.
What I suggest is that, being young, you can take up bit risks. You can study about stock exchange, mutual funds etc from the internet. (I mainly rely on moneycontrol.com for the same). Increasing your share in PF is a good option. I may not recommend FD's at your age. Start saving smartly, you will sit up in a pile of money tomorrow. Congrats for your job and salary. So, where is the party?

Thanks for your wishes! I have just started working so I am still new to Finance. Just starting to learn the basic concepts of Fundamental analysis. I am trying to learn as much as I can. Please excuse me if I ask stupid quesions but how do I increase my share in PF? Isnt it a fixed thing in a salary package? You too have recommended not to go for a FD? Can you elaborate why?

[androdev]

Originally Posted by Saanil

Just for my knowledge I want to know why is FD not a good option? I mean is it because the return it offers is too low? A couple of my friends also said not to put money in a FD. I just wanted to know why? It is the least risky I suppose.

Extract from the link I listed earlier:

7. Not taking risk is extremely risky in today’s world

I remember how one of the person I was talking on forum told me that he keeps all his money in FD’s and PPF and LIC policies , because he does not want to take any risk , All I asked him was “What are you doing now then ?” and he didnt understand what I am pointing at .. If you are like that and hate to put your money in Equity , don’t like to spend time on your financial life , don’t like to take time from your busy schedule to organise it , your are already taking a high risk in your financial life , you are distancing yourself from a good financial life each day and each moment. You will probably meet all your goals , but may be half-baked, not on time , who knows !

Roughly translated: FD returns adjusted against inflation and tax deductions can actually be negative at times. If someone had put Rs.X say twenty years ago in a recurring FD vs the same amount in a mutual fund - the outcomes would be dramatically different. The longer the time-frame, the more dramatic the difference would be.

You should certainly be looking at looong time frame. One can't get younger than you to start earning and investing. Time is on your side. I am not saying put everything in equity, just explaining why all-in-FD is a bad idea for young people. Read up more till you get complete clarity on these aspects.

Bottom line: Return is always proportional to risk. No bypassing it.

[Lalvaz]

Originally Posted by karanraheja

Congrats Saanil. I would advice you save atleast 2-3 months salary as a back up before starting to invest. In the meantime you can look at options like SIP's , Gold ETF. There is a mutual funds thread , do have a look there . All the best !

I agree totally. Saanil, you need to first create a reserve, so 2-3 months salary in an FD would be a good starting point. It will enable you to have an emergency corpus incase you ever need it, rather than having to rely on a loan. And no, FD's are not bad, if its used wisely. Only reason people advise against it is cos the returns are lower than inflation generally, so you end up losing value in the long term.

Other investment avenues you need to consider are Equity, Real estate, Gold. Equity is volatile, but generally more efficent in the long term, Real estate is not liquid, but generally gives better returns than fixed deposits, and in some cases better than equity, and keeps pace with inflation, plus its a tangible real investment. Gold is well the best store of value in tough times, easiest to encash, and although its highly priced currently, chances are it could go up further.

You being into equity research will probably end up investing a large chunk of your money in the stock markets eventually, it does get a lil hard to stay away when you watch the markets on a daily basis, but remember to diversify your investments, and remember to save in a disciplined fashion rather than in spurts. Reduce your liabilities which includes loans on non productive things, such as auto loans, personal loans, credit card loans etc..., Home loans are probably the only loan which might give you better returns thanks to the tax breaks, however be cautious in entering the real estate space right now.

Congratulations on your new job and wish you all the very best in your career.

[Abeer]

Originally Posted by abdriver2000

To elaborate a bit further, regular Gold funds do not invest 100% in gold. They are more like mutual funds investing in allied businesses like gold mining and processing. These funds do not follow the gold prices.

Gold ETFs invest almost entire money - fees into physical gold. Hence they closely follow gold prices. Also, most Gold ETF are priced the same or very similar since they are available in 1 or 0.5 grams units. Demat account is required to purchase ETF.

Checked with ICICI Direct ( Have a Demat account with them ). According to them if I buy ETF via SIP, I will be charged the charges applicable for MF SIP.

[Saanil]

Originally Posted by Lalvaz

I agree totally. Saanil, you need to first create a reserve, so 2-3 months salary in an FD would be a good starting point. It will enable you to have an emergency corpus incase you ever need it, rather than having to rely on a loan. And no, FD's are not bad, if its used wisely. Only reason people advise against it is cos the returns are lower than inflation generally, so you end up losing value in the long term.

Thanks a lot for your suggestion! Even I am thinking of doing the same. FD and HDFC top 200 mutual fund is what I will be looking at for the time being. I will follow this thread regularly and also update with what I finally do.

[Pallavi]

Originally Posted by Saanil

how do I increase my share in PF? Isnt it a fixed thing in a salary package?

EPF is a fixed component mentioned in the salary package. You can increase your share through VPF (Voluntary Provident Fund). This also goes into the same PF account and earns similar interest. The employer will not match the contributions made by you towards VPF.

You can talk to your HR and if the policy allows, they will guide you through the process.

[Saanil]

I want to know more about insurance for youngsters like myself. Recently I heard about "term" insurance. They last till about 65-70 years of age, have yearly payments of 7k-9k and the final amount is also huge (I heard of 1 crore). But unlike normal LIC policy we do not get money back if the term expires. Has anyone here taken such an insurance?

[carboy]

Originally Posted by Saanil

I want to know more about insurance for youngsters like myself. Recently I heard about "term" insurance. They last till about 65-70 years of age, have yearly payments of 7k-9k and the final amount is also huge (I heard of 1 crore). But unlike normal LIC policy we do not get money back if the term expires. Has anyone here taken such an insurance?

2 points
1) Insurance isn't investment - it's risk management.
2) If anyone needs to insure his life, the only kind of insurance he should ever think about is 'term' where you get nothing back.

However, before you get into this, the first question you need to ask yourself why do you need to insure your life now?

[Saanil]

Originally Posted by carboy

2 points
1) Insurance isn't investment - it's risk management.
2) If anyone needs to insure his life, the only kind of insurance he should ever think about is 'term' where you get nothing back.

However, before you get into this, the first question you need to ask yourself why do you need to insure your life now?

Yes. I do uderstand insurane is not an investment. I was just asking as I wanted to know more about it. So at what age generally one should look for insurance?

[carboy]

Originally Posted by Saanil

Yes. I do uderstand insurane is not an investment. I was just asking as I wanted to know more about it. So at what age generally one should look for insurance?

Some people may need life insurance when they are 25 years old. Others may never need it.

So the question is - why do you want to insure your life?

If you die tomorrow, will someone else' life style will be very badly affected.
As & when you answer yes to this question, you need to insure your life.
It may be now or it may be never for some people. For eg, if I have enough savings such that my dependents can live peacefully even if I am dead, I may never decide to insure my life.

[mb_jg]

Guys, need some desperate help in investing. I have some liquid cash that I need to invest for my 3yr old boy. My dilemma is that I do not want to get into the recurring premiums cycle, so am looking for something similar to a single premium policy, NSC, or PPF.
The only liability I have is a home loan for which I shell out Rs.17,193 a month @ fixed interest rate of 9.50% p.a for the entire 20yrs tenure.
I don't have an appetite for high risk, so am preferably looking for something that's very safe.
Please help!