Money Tips To Bet On: Stunning strategy that can help you become quite rich

Money Tips: Oh, to become rich! Turn that cry of despair around and instead try this! Well, an ideal ratio of fund allocation in Bank FD, Debt Funds and Equity Mutual Funds has to be maintained, says experts. And what is that money-making ratio? Read on!

Start with Bank FD to debt funds and then move on to debt mutual funds leading to multi-cap, large-cap, mid-cap and small-cap funds, say experts. Photo: Reuters

How to become rich may not be an easy question to answer, however, if we go by the tax and investment experts' views, mutual fund investments have the potential to answer this question of the investors. However, investors should follow a logical strategy while investing. These money tips include basic knowledge about how to start mutual fund investments and what should be the category if the investor does not have much money for investing and how to diversify the portfolio. If an investor follows money tips, he or she would definitely be able to beat inflation during the investment period and the real return they will get would see them well on the way to becoming rich.

Speaking on how an investor can start his or her Mutual Fund investment, Feroz Aziz, Deputy CEO at Anand Rathi Private Health Management said, "When someone thinks of investing, first and foremost investment option that comes to one's mind is a bank fixed deposit (FD). However, in the long-term perspective, bank FD won't be enough to beat inflation."

So, what should be done next for getting better returns? Aziz says, "The investor has to choose some other option like Mutual Funds. In Mutual Funds, one should start with debt mutual funds as they give better returns in the short-term and returns are much higher (1.5 to 2 per cent) than the bank FD."

TRENDING NOW

Aziz added that investment in debt funds like PPF, NSC, National Pension System or NPS, etc. yield around 8-9 per cent but in long-time perspective, it helps an investor to save income tax outgo when his or her income goes up after five-six years of services.

Investors will find that while the above will put them on their way with a solid foundation, they have to build on that to really make money. Azziz concludes, "For achieving long-term investment goals, equity mutual funds are the option that an investor can try."

Elaborating upon how an investor should begin investing in the equity mutual funds, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Equity Mutual Funds are of various categories — Small-cap, Mid-cap, Multi-cap, Large-cap, ELSS mutual funds etc. For a beginner, a multi-cap mutual fund is the best way to start equity mutual fund investment. If the surplus amount is higher then one should start with both multi-cap and large-cap mutual funds, however, if the money in hand for investment is not of higher value, one should first choose multi-cap mutual funds and later on diversity one's portfolio through large-cap mutual funds. Similarly, one can go on diversifying one's portfolio by allocating funds to mid-cap and small-cap mutual funds."

Jhaveri said that in long-term means over 10 years or above, any of the equity mutual funds would give at least 12 per cent returns on one's investment.

Asked about an ideal ratio of fund allocation between Bank FD, debt funds and equity mutual funds, Aziz said, "There is no thumb rule for fund allocation in one's portfolio but if someone has begun investing at around 25 years of age, then he or she should invest 65 per cent fund in equity mutual funds, 25 per cent in debt funds and rest 10 per cent in Bank FD — an ideal way of diversifying one's portfolio."

TAGS: