Mind ur Step Ten golden Rules for a Young Investor Young Investors who are there in there twenties are in the best position to invest in the equities through mutual fund. The rule of 100 will give the best answers. Basically 100 less your age gives the proportion of investments that can be done into equities and the rest in debt. So if your age is 25 then 75% of your total investment will get into equity and 25% in debt. Maximum proportion of the disposable income should be allocated to the equities. Disposable income is the net pay less fixed expenses like loan payments and household expenses. Investors can follow the systematic investment plan on a monthly basis in diversified mutual funds. This will put a discipline for investors to invest every month. Ideally a fund with the biggest corpus should be chosen. There are some funds that are allowing investors to put money to the extent of rs 50-100 so that all types of investors can enter the fund through the SIP basis. Over the last ten years, the index has returned 13% per annum and against the SIP investment has returned 19% per annum. Young investors are in a position to be very long term investors where they can invest into equity funds and wait for years till returns accumulate. Assuming that the investment begin at the age of,the investors can stay invested for 35 years assuming that he works till 60 and withdraws all his investment at the same time. Young investors in there twenties can take the maximum risks. They can invest into sector specific funds and mid cap funds. Young investors are also in a position to invest into commodities. Commodities faces the longest cycle which are basically in the range of 7- 15 year. The super-cycles in the commodities are in the range of 50-60 years Young investors should not take insurance as a return. The objective of insurance is completely different from equities. Ideally unit linked investments pans should not be considered as objects for maximizing wealth. For that a pure equity related fund is the best tool. The cost for premature withdrawal is very high in the ULIP"S and the investor takes the higher risk of underperformance from the insurer. The surrender value for ULIP's is lower in the initial years of investment.
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