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Subbu's Solution

I am a 30 year old married male without kids and live with my parents in a house that we jointly own in Delhi. I have 2 rooms that should be sufficient for me for several years to come. Now I have 2 options to invest my monthly surplus money in. Either buy a flat in Bhiwadi or elsewhere or invest in other avenues like stocks, mutual funds, FD's etc. Which option should I choose? I am comfortable with equity investing in general. - Sandeep S Chadha.
Hi Sandeep, thank you for writing in. Since you are young and already own property, it may make sense to diversify your monthly surplus money across asset classes. Your portfolio should thus have a combination of Stocks, Mutual Funds, Gold and Fixed Deposits. A few key things to remember though:

A) Stocks are slightly more risky than Mutual funds and Fixed deposits.

B) Stock selection also requires careful consideration and requires considerable amounts of time and skill to recognize the stocks in which you should put in your savings, and the time you need to stay invested / exit from a particular stock etc. All this needs specialized knowledge and lots of experience in investing. Therefore it seems more prudent to invest in a diversified mutual fund.

C) Fixed Deposits are instruments where you can park your money for long term like a 15 - 20 year time horizon.

D) Gold is the ‘insurance’ asset for your portfolio. Gold prices were steadily on the rise even when the stock markets across the globe were plummeting, Gold is the only asset class to display relatively steady growth over the last 20 years. However, investing in jewellery may not be an ideal bet in comparison to the opportunity presented by Gold ETFs. Gold can also help insure you against inflation.

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Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

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