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Where Should I Invest My Money: A Complete Guide For 2021?

The investment or depositing funds across various asset categories should be focused on its financial goals, the timeframe, and the willingness for risk. Investors should be aware.

There are several reasons to take notice of at the outset for a small investor or anybody who invests for the first time. Several individuals who burned their hands and gone bankrupt in the early investments frequently remain out of the investment.

Just before you spend a single cent, at minimum three important things have to do – First, investment is a component of the processes of financial management and the latter must thus take place before you invest.

Moreover, prior to investing, concerns including health and life hazards must be taken into account. Lastly, an emergency fund has been set up to meet all financial requirements. 

Only after a financial plan and an emergency fund have been established and the risks properly addressed can you contemplate engaging actively. This helps you and your family relations not to dive into long-term ventures.

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Asset Allocation

You require an asset management strategy to distribute investment among stock, debt, and gold assets. What else you need to combine these classless assets will vary on your risk tolerance and years to go. 

“Each investor's asset allocation is distinct and is dependent on the individual's overall economic goals. As a beginning, it may be a suitable approach for progressively increasing the share allocation. It is good to have a larger liquid/bank allocation and debt in the early phase. 

Once the fluctuation of asset classes like equities is tolerable, you may begin to increase the allocation. But please note that these equity investments are long-term.

Debt Portfolio

For an employee, 12 percent of his or her basic pay goes to the EPF fund, a debt asset. The PF balance continues to generate tax-free yield till withdrawal, based on the interest rate announced by the government annually.

A new investor may also establish a PPF account in the debt sector that also gets a tax-free return. The PPF interest rate is determined by the government every quarter of the calendar year. Compounding works best in PPF, a 15-year plan with additional sovereign support.

A new investor, other than EPF and PPF, may not need any other debt investment even if there is a financial objective about three years ahead, in which the debt funds suit the bill.

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Equity Portfolio

First time equity investors might commence with index funds and over time, big and small size funds can be added. Equally essential is the choice of the appropriate Equity Mutual Fund (MF). Choose continuously implementing MF schemes that have benchmarked over the long run. 

People need a fundamental portfolio of index funds and big funds, and subsequently you require mid-cap funds to complete it. Ignore theme and sectoral funds in the early investment years. "Investors have an option either to diversify in direct stocks or to engage in assets mutual funds to construct their portfolio. 

Equity funds may be a preferable option since the expert fund manager manages these products. First of all, investment in large cap or index funds is one of the greatest methods to develop a stock portfolio. This may provide a solid platform for the stock portfolio of an investor. 

Again when the investor gains faith, it may expand the investment and subsequently add some contribution to Large & Mid-cap, Flexi Cap and Mid-Cap

SIP Investment

In particular, it is preferable for an employee to maintain investing consistently and disregard short-term fluctuations on the stock market. Using the SIP – Systematic investment planning – seeks to enhance a structured technique to saving habits. 

The SIP fits a wage person as a set amount is regularly reduced to savings by monthly income. But for the wage earner there is an automatic part of the income in the EPF which really is a debt asset. 

"EPF is an excellent tool for investing in the debt as it provides both higher profit potential and security. It may also take into account long-term debt savings, since this investment can either be withdrawn if the investor withdraws or decides to quit the employment. Short- to mid-term needs may be found for other debt instruments.

Retirement Goal

In particular, retirement is frequently an unknown objective for a new investor if you are youthful. But a time limit may cost you a lot, thus allocating money from the outset for retirement. 

The positive thing is that if you start saving early, you need far less to build up a big pension. You may establish a different stock MF portfolio including some NPS savings for retirement savings.

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