Q. I want to invest ₹ 1 lakh for 5 years in low risk or no risk mutual fund. Please guide me.
Arun Moody
a. There are no zero-risk mutual funds (MFs). For low-risk MFs, the ideal option is debt funds of short or very short duration categories. For slightly higher returns without too much risk, you can consider hybrid funds like Equity Savings Fund and Conservatively Managed Balanced Advantage Fund. Over a period of 1-1.5 years, these funds will see more volatility, but if you hold after this period, it reduces. They are also more tax-efficient than debt funds. You can go for a combination of these options or just debt funds. About three funds will be enough.
Q. I want to know how can I start investing in cryptocurrency.
Anil Kumar Jain
a. Investment instruments generally follow the rule that when something is risky, the potential return is also high. However, this rule appears to be broken when it comes to cryptocurrencies, especially in the current situation.
There are many high-magnitude risks associated with crypto and it is difficult to see potential returns commensurate with such risks. One, volatility risk – prices have fallen by more than 50% in the past year; They also oscillate wildly and unexpectedly. Two, taxation risk, especially in India. Third, regulatory risk where one cannot chart the future of the validity of such currencies. Fourth, the high risk of fraud. With all these risks, investing in crypto now seems unfair. If you still insist, there are a handful of exchanges operating in India that will allow you to fulfill your wishes.
Q. I am 21 years old. I plan to invest in REITs as stocks and cryptocurrencies are getting better. Is this the right time?
Sanjay Shivkumar
a. You can invest in REITs, as they are a great way to play the real estate space. However, for wealth creation, stocks (or equity MFs) are far better. Correcting the markets is not a bad thing. Market correction is, in fact, the best time to invest as it allows you to buy at cheaper levels. It is important to stay invested for the long term to allow the market cycles to run.
Q. I am a Gynecologist (41) and a member of the Indian Medical Association which runs a pension scheme. I can deposit any amount monthly till the age of 60 years. The corpus will be kept as FD at 7.5%. At the age of 60, I can opt for monthly pension or keep some part of it as corpus. If I invest Rs 20,000 in a month till 60, will it give me better returns or invest in MF?
Sushant YS
a. We are not aware of the finer details of the pension scheme, including how the returns are generated, corpus managed and taxation. This makes it difficult to compare with other investment products. Second, there is a wide range of MFs, and the returns will depend on which fund you went for, how aggressive the fund is, and so on. For example, if you have invested in equity-oriented MFs, it is likely to generate better returns than a pension scheme (assuming that the scheme invests only in debt-based instruments) over a period of about 20 years. More than. You can stick to index-based funds only.
Third, the decision will also depend on your other investments. NPS is a good option to build a retirement corpus and can also be more tax-efficient than a pension plan. To make the right decision, work out how much risk you are willing to take which will help you narrow down the funds to invest. Understand where the pension plan will invest and how the returns will be. See how you can allocate between funds, schemes and NPS. You can always combine these; It doesn’t have to be one or the other.
(The author is the co-founder of Primeinvestor.in)