How to diversify your investments to ensure good returns in India

        Planning for your financial future relies on investing. Keeping your money in various forms of investments benefits Indians over time. When you own various kinds of assets, you will not suffer a serious loss if one of your investments performs badly.

We are meeting to see how we can introduce every Indian to the proper means of investing their funds prudently.

1. Direct equities and mutual funds are receiving 40% of the money I have saved

Breakup:

Invest just 30 percent of your money in Equity Mutual Funds (also including SIPs in this group).

I place 10% of my portfolio in direct stocks.

Why:

After a while, equity outpaced how much inflation was increasing. During this time span, investors usually made an average of between 12% and 15% through the stock market. Many people pick Equity Mutual Funds because they offer a way to increase their wealth. An SIP helps you invest your finances in the stocks through a regular investment process. In general, SBI Bluechip Fund is celebrated for how reliable and strong its approach is. Parag Parikh Flexi Cap is an example where your money is automatically spread among several investments. Nifty 50 Index Fund:With little effort, it lets you trade in the market for affordable minimal charges.

Direct Stocks:

For people knowledgeable in stock selection, it is wise to invest only a small sum in FMCG, IT and banking stocks that issue regular dividends.

2. A percent belongs to the fixed income instruments category which is about 30%.

Breakup:

You may deposit your money into a Public Provident Fund (PPF) and earn 15% interest on it.

Fixed Deposits (FDs) will pay out 5% interest.

You will earn 5% from RBI Floating Rate Bonds / Government Bonds.

If you are eligible, the SCSS / Senior Citizen Savings Scheme pays 5% annually.

Why:

They allow investors to have capital secured and predict what their earnings will be. Now, PPF locked for 15 years provides approximately 7.1% tax-free returns. You can sell FDs easily, but RBI bonds and SCSS provide security and a decent amount of income.

Tax Benefit:

Under the Income Tax Act, Section 80C allows deduction for PPF, SCSS and tax-saving 5-year FDs.

3. Quantity of gold – 10%

Breakup:

Sovereign Gold Bonds (SGB) offer an interest rate of 6%.

Gold ETFs / Digital Gold: 4%

Why:

 Gold acts as a barrier to defend your funds from changes to money and currency. You can earn 2.5% interest each year with SGBs and, if you keep the bonds till they mature, Gold Bonds give you extra income and this interest does not get taxed. For most, dealing with fine gold is not a good idea as they must preserver it well and are eventually charged.

4. Real Estate is 10% of earnings

Why:

A property supports real estate backing and it earns money through rental income while its value rises with time. Since stocking up on a security and reselling quickly requires a lot of funds while raising little cash, financial advisors suggest owning no more than 10% of your portfolio with this type of investment. Another option for you would be REITs, since they let you manage money easier and with a lower real estate investment.

5. International Investments – 5%

Why:

Selecting investments across countries prevents bad decisions based on location and brings interesting companies such as Apple, Amazon and Google. You can invest by picking from: Another option is to check International Mutual Funds because they have proven to perform well. Examples are ETFs that mimic the value of US or global stock indexes such as the Nasdaq-100 Because of this, the firm can resist changes in the rupee and build greater wealth.

6. 5% should go into your emergency fund

Why:

It’s best to have enough liquid instruments on hand to last you at least 3-6 months should you need them.

Best Options:

These Mutual Funds do not put their money into assets that produce income. The Sweep-in Fixed Deposits Plan as described below An account with a good rate of interest So, you can trust your emergency funds instead of your long-term investments when you need money fast.

7. Insurance is something you need, not an investment

Although insurance is not considered part of your investments, it ensures your financial plan stays on track.

You should consider 10 to 15 times your current income as term insurance.

Health Coverage: It’s important to have a ₹5–10 lakh family floater health insurance policy.

How to Divide Your Total Portfolio (in %):

  Asset Class                        Allocation (%)   Description

Equity Mutual Funds (SIPs)      30%              Regularly investing a portion of your funds into different                                                                            equity funds

Direct Equity (Stocks)               10%              Investing in specific company shares to seek greater return

Fixed income(PPF,FDs,Bonds) 30%              Secure and dependable tactics for making money and                                                                                  saving it

Gold (SGBs,ETFs)                    10%              you can use SGBs or ETFs as a protective investment and                                                                          to spread your risks.

Real Estate / REITs                   10%              Investment in property or real estate investment trusts for                                                                            income/growth

International Investments          5%               Access to global markets helps with geographical                                                                                       diversification

Emergency Fund (Liquid)         5%               Assets with a high liquidity can help in case of unexpected                                                                         costs. 

Diversify investment and check your Portfolio periodically

As a rule, every year reconsider your fund choices to stay in line with your personalized allocation.

Make sure you don’t hold too many types of assets, as it could lead to less return and more difficult decisions.

Invest your money using plans that follow a schedule of steady investments.

Remember to watch tax percentages, the expense of acquiring funding and anything happening in the market as they might influence your company’s outcome.

Keep to your plan, regardless of any sudden changes in the market.

Conclusion

  Having a mixture of assets in your portfolio makes you less likely to lose money, reach your goals and earn regular returns. A combination of equity, debt, gold, real estate and global assets in India lets you develop your wealth without exposing you to high risks. Tailor your portfolio to handle the level of risk you are willing to face and to help you acheive what you hope to do with your investment. You may talk to a SEBI-registered financial advisor about your financial planning. It’s wise to spread your money into different areas, because not having all your investments in one place is real advice, not just a saying.