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Young and single – To replace a part of your main income during retirement the earlier you start investing in EQUITY MUTUAL FUNDS the better. To benefit from volatility go for the SIP route.

Young and married – For long term goals like children marriage, education etc. equity mutual funds are the best route. If you calculate, the cost of education has actually risen even faster than the official inflation rates given by the government. Historically equity funds give easiest and cost effective tax free returns in the long term.

Middle age – For long term goals as above as well as for getting the benefits of tax. Dividends of mutual fund are exempt from tax in the hands of the recipient. Equity oriented funds are taxed at only 10% for periods of greater than 1 year.

Retired - Depending on the corpus and taxation mutual funds can be beneficial.

In 2007 everybody was running after RNRL and RPL(Reliance Petroleum) shares. Both touched highs of around 290 and then fell like anything to be later merged with bigger companies in ratios which were not favourable for the ordinary investor. i.e. us. Still today we want to invest in shares which are the flavor of the season in the market. It is not for us to invest in shares. We do not see the forward earnings, growth projections etc. before investing. The mutual fund manager invests in shares only after thorough research. Also being big fund houses they have paid access to research reports which normal investors would not have. In the LONG TERM, In a sample of 100 only 5 people who would have invested in shares would have benefitted in the long term from their overall portfolio of shares whereas in the same sample there would be easily more than 90% long term mutual fund investors who would have benefitted from their investments.

Don’t go overboard any assets. In 2007 everybody was buying equity, in 2008-9 everybody was buying gold, and in 2010-11 everybody is going over board silver and real estate. Please do not keep on buying things only when they are up. There is a time for everything. Get your overall asset allocation right.

In the herd to buy an already appreciated asset we forget to diversify. Sometimes we shift our whole savings from one asset to another which is very risky if that asset does not give returns or falls drastically. Never keep all your eggs in one basket. Diversify and reduce the un-systematic risk and fund specific risk

Do not invest for the short term to get the quick buck in equity mutual funds. Short Term Money can be parked in money market, liquid, short term debt funds depending on your time horizon.

Pick the formula, “Income – Savings = Expenses” and not “Income – Expenses = Savings”

Don’t go overboard with traditional insurance schemes. Please remember that they are going to give you less returns than government securities or any fixed deposit, because they have to invest their corpus as mandated by rules of IRDA in which atleast 50% is in government securities. If you want to go for safety and risk cover go for a combination of term insurance and debt mutual funds. Mutual funds are the most low cost product in our country as they are highly regulated by SEBI and there are various types of mutual funds depending on your risk appetite and time horizon.

Which brings us to one important point. Many people still see mutual fund as just equity but there are debt funds, balanced funds, cash funds, gold funds and lot of hybrid funds with different asset allocation in them. Please erase from your mind that mutual funds go down when market goes down. Only equity and balanced funds would swing wildly with the markets, not debt or cash funds. They have different objectives and are better than traditional life insurance and savings account respectively.

Every country has different regulations and different products which would be cost effective in that country. Do not invest with a bias of your country in India.

India has a very manageable tax system. Why not maximise your white money and pay some amount as taxes. Learn to manage your taxes and not avoid them. Physical assets may give fame but they will not give freedom. Financial assets out of white money will give you freedom and happiness. Stay stress free.

Dont go to those who have a target for their jobs. Go to those who have a target for your growth.