I have a disposable income of Rs 50,000 every month. I have been investing Rs 25,000 in equity markets month on month and built a decent portfolio in the last three years. Now, this Rs 50,000 month on month can be invested by me, but I want to invest with minimum risk. Do I continue to invest in equity markets by choosing stocks that do not fluctuate much? Or, would you advise any other investments?
- Ravindranath, Hyderabad
Ravindranath, I would firstly recommend you to get a risk profiling done for yourself from a good financial planner. You would then be able to get a fix on what asset class – debt or equity – is comfortable for you and in what proportions. The time period for which you wish to invest is very important and, along with your risk profile, form important considerations for formulating the right portfolio.
When you invest in stock markets and choose the mutual fund route instead of direct stocks to do that, your risk immediately comes down due to diversification, professional management and constant rebalancing done on portfolio by the fund managers. So, my advice is that if you wish to continue in equity, go in for equity MFs. However, if you do not wish to go in for equity or want to choose lesser equity option, hybrid MFs like Hybrid Aggressive, Hybrid Conservative and Equity Savings Fund categories are available in MFs where the rebalancing and choosing equity and debt assets is done by the respective fund managers. Alternately, you can create a hybrid option yourself by preparing a balanced portfolio by suitably choosing equity MFs and debt MFs yourself. The onus of rebalancing is on you then. However, if you want to take an extremely safe option and are comfortable with the low returns that’ll come alongside that, bank and corporate FDs, and debt MFs would be the way to go.