7 Replies to “I am 21yr old software engineer earning Rs22,000 pm.I want to start investing in mutual funds.?”

  1. Answer to your question is as follows:

    1.Which one should I opt between Equity and Debt mutual funds?

    Investment in equity or debt is considered this way
    Investment in Equity = 100 – your current age
    so as you said your current age is 21 so investment in equity will be 100-21= 79% in Equity and 21% in debt.

    2.Should I go for short-term investments or long-term investments?
    It completely depend on you the kind of responsibilities you have in your life, considering no financial responsibilities at present in your life can think of going for long term investment

    3.MIPs or SIPs?

    MIP mainly are products which invest 80% in debt and 20% in Equity.
    Considering your age it is not advisable to invest in MIP

    SIP means systematic investment plan

    …it is a method of investing a fixed sum, at a regular interval, in a mutual fund.
    It is very similar to monthly saving schemes like a recurring monthly deposit / post office deposit

    Advantages of Systematic Investment Planning

    Encourages Regular Investments (just like recurring deposit

    A Convenient way to invest regularly
    Lower initial investment without cutting into regular expense
    Long term perspective
    Rupee Cost Averaging Benefit to counter volatility – it brings down
    the average cost of your Investments
    No timing the market!!!
    Meet investment objective with investment needs


  2. SIP is the best investment in Mutual Funds. Even for long term you can gain good profit. This is a very small investment per month and at the end of many years you can get huge money as profit.

  3. Two things you have to take up in your mind.

    1) Will it be a Tax Saving benefit.
    2) Dividend received from M/F not taxable but subject to Market risk.
    3) If you are not in the Tax Bracket you can invest in M/F.
    4) If you are attracted Income Tax at the end of the year Tax Savings is always benefited to you.

  4. Being a beginner in mutual funds investment, I would suggest you to approach some reputed stock brokers providing professional mutual funds investment services. Their experts will suggest you the best mutual funds scheme – equity or debt depending upon your financial profile. In initial stages, it is advisable to go for long term investments and that too in SIP mode where the risk involved is less. Once you gain confidence, you can change your investment styles.

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