Starting of Career and not clear about Financial Planning ? Here comes your Portfolio Manager

Portfolio Management term is used mostly in context of large funds management but fact of the matter is whatever the size of wealth one have need to be invested/utilized in such a manner that it provides required liquidity as well as best return to the investor.

People at initial stages of career tend to ignore funds planning due to lack of awareness and miss out so many benefits which would flow in if investment starts happening since first month of earning. This is the stage where one need to be extra careful about the balance between required liquidity and risk appetite.

Gone are the days that people use to keep money in Fixed Deposits  and get double money in five or three years. Our economy is growing at ~9% annually with solid growth in Industrial Segment and this is the time to be the part of much awaited double digit growth.

In general, first year of income should have following types of investments in portfolio :-

1. Life Insurance Policy :- A great tool to get healthy return (if policy is carefully chosen) and Risk Cover. It will enable investor to get Income Tax concession on the premium paid in respective years. Avoid Unit Linked Insurance Plans in this category. THE YOUNGER YOU START POLICY THE LESSER IS PREMIUM, SO GET MAXIMUM OUT OF YOUR YOUNG AGE HERE AS WELL.
2. Mutual Funds with Income Tax Rebate (ELSS) :- There are various mutual fund products available in market with 3 years lock in period. These products enable you to avail Income Tax benefits to the extent of investment made in a year. If in case you are not willing to buy Life Insurance Policy and not willing to block money for longer period say 15-20 years which is the case with Insurance Policies, then this is the product for you. Keep your money in market for 3 years and get best of the return over and above tax saved in first year. DONT GET INFLUENCED BY MARKETING STUNTS OF MUTUAL FUND COMPANIES. CHECK OUT WEBSITES LIKE WWW. MONEYCONTROL.COM FOR COMPARISON OF RETURNS FOR EVERY PRODUCT IN THIS CATEGORY AND DECIDE. LOOK FOR BIGGER AMCs oly.
3. Mutual Funds (Equity Diversified) :- First year of income would also require higher liquidity. So instead of keeping money in Bank Saving Account or Fixed Deposit, Invest this money into open ended Mutual funds (Equity diversified) which will ensure you the higher return as compare to Bank.
4. Gold :- Now a days this product comes handy for all type of investors. No matter where the world move this is the one investment product which will continue its north rally. This is needed to diversify risk of money invested in Mutual Funds, especially equity diversified products.

I would urge you to not to get into share/stock market at initial stage of your career as risk involved is extremely high and your portfolio is not robust enough to absorb any shock.

Mutual Funds can be bought through Demat account in Bank, directly from AMC or borkers (traditional way and I do not recommend it). Technology has made life so simpler that mutual funds can be purchased in few minutes and same applies for sale. Infact it has become easier than encashing a Fixed Deposit.

Keep track of all your investments regularly and take corrective actions wherever needed to make sure you get best out of it. The detailed tracking of your portfolio will help you learn from your mistakes and ensure that   the same are not repeated in future.

Small rivers make an ocean and one day will come that your wealth would be fatter enough to make you think of buying a house in posh area of Delhi or Mumbai and owning luxury sedan. So do not miss even a single day and start investing today. India is land of opportunity and this is the right time to catch the train of Growth.

Have Great Investments and Highest Returns. Good Luck.