The best investment plan is the one that not only takes care of our needs but also creates wealth over time. It is not just one of these, but a combination which will help you maximise your return over time. However, investing without understanding and enlisting your financial goals is not at all effective. You need to have an investment plan because this works like a roadmap. This not only can create wealth in the longterm, but can also assist in financing the needs, as and when it comes. You need to divide your goals into two categories – wealth creation and need-based investing.

•Investment plan for wealth creation: Wealth creation needs to be an independent goal and not mixed with need-based goals (for eg: Child’s education, buying a house, etc). Of your total investable corpus, keep about 35% of the funds for wealth creation. You can invest in wealth creation in the following ways:

•Invest in good mutual funds via SIP. Since your investment horizon towards this goal will typically mutual funds are the best forms of investment.

•Invest in index funds. It is safer than mutual funds and mirror the underlying index in terms of returns.

If you can, invest some small amount of the funds available for wealth creation in good quality stocks. You just need to invest the money and hold the stocks.

If you are not comfortable with investing in stocks and mutual funds directly, you can invest in a financial product called smallcase. Smallcase has forged into an arena that is mid-way between stocks and mutual funds. It tries to plug-in many of the flaws prevalent in both the investment avenues. A smallcase is a portfolio of up to 20 stocks that are based on a market trend or theme. There are various models of smallcases you can invest in, like thematic, model-based, etc. Since smallcases are intended to be long-term investments, works best when you choose a smallcase by a theme that you’re bullish on for the long run. Smallcases can be bought and sold without any lockin periods, so you would have full control over your investments. At present, you can invest in smallcase through various brokers, including 5 Paisa.

•Investment plan for need-based goals:

Now, the need-based goals should be categorized into short-term and long-term goals. Examples of short-term goals are: buying a car, family vacation, etc. while long term goals are: retirement, child’s education, buying a house, etc. To get the maximum benefit from your investments, it is prudent to prioritise long term goals over short term ones. Of your total savings, around 65% should go towards need-based goals.

A) Investment for short-term goals

Fixed deposit with a bank

Liquid funds

Recurring deposit

Hybrid funds

B) Investment for long-term goals

Invest in some good multi-cap funds

Invest in 1-2 good large-cap funds

Invest in PPF for tax saving and capital protection.

You can divert some funds to smallcase as well.

Long-term and Short-term profits can be acquired too with consistency through a professional broker. (value investing is how people retire rich).

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