Manag­ing your money can be tricky. Send your queries, and top- notch in­dus­try lead­ers will help you re­solve any is­sue.

Business Today - - INVESTING Q&A -

Sudesh Rana: I am a 23-year-old grad­u­ate and work­ing as a trainee for the past seven months. I get a monthly stipend of ` 16,000 that could be raised to ` 25,000 in an­other six months, and I can save up to ` 10,000 from my salary. What should be the best way to in­vest the money?

Vivek Ran­jan Misra, Head of Fun­da­men­tal Re­search at Karvy Stock Broking, replies:

The pri­mary goal of any in­vest­ment is to beat in­fla­tion and get some ad­di­tional re­turns out of the money you have put in. Many young peo­ple now shy away from bank fixed de­posits be­cause FDs can­not pro­vide in­fla­tion- beat­ing re­turns. On the other hand, eq­uity as an as­set class has caught peo­ple’s at­ten­tion be­cause the re­turns re­alised over the long term ( 10-15 years) are far su­pe­rior com­pared to other as­set classes. As eq­ui­ties have the po­ten­tial to de­liver su­pe­rior re­turns, the risk as­so­ci­ated is also high. As you are young and have time on your side, we would ad­vise you to al­lo­cate the ma­jor part of your sav­ings to eq­ui­ties to de­velop a mean­ing­ful cor­pus. But first of all, you should build an emer­gency cor­pus to take care of all con­tin­gen­cies. For that, you should in­vest ` 6,300 for the next six months. Part of this amount can be in­vested in FDs and the rest in a debt liq­uid fund as the lat­ter could pro­vide re­turns of 6.8-7 per cent. More­over, you should buy term in­sur­ance of ` 1 crore, which will cost you around ` 700 a month. Next, start a monthly in­vest­ment of ` 3,000 in a mu­tual fund via SIP. Af­ter build­ing your emer­gency cor­pus, you can also in­vest that money (` 6,300) in mu­tual funds. You can al­lo­cate ` 2,500 in a small- cap fund and the rest can be in­vested in large caps.

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