Ullas, 22, software engineer from Bangalore: My monthly take-home salary is Rs 22,000. I want to know how I can invest my money to get (good) returns soon. I want to invest for 2-3 years because I want to do my MBA after that. Please tell me what is the best way to do it. I am thinking of investing in NSCs (national savings certificates).
Halan: You have got the right attitude but the wrong product. National savings certificate (NSC) will not get you to your goal. NSC is a six-year product. I will suggest a strategy in which 90 per cent of your money goes into a short-term debt fund...Mint 50 is a list of 50 funds which Mint Money has put together. We have five short-term debt funds and I will recommend two to you: Templeton Short-Term Income Plan and Reliance Short-Term Fund. Both have done about 9.5 per cent a year in last three years. Put 90 per cent of your monthly savings in this It's a good product for 2-3 years but put 10 per cent of your money into an equity-linked product like a balanced fund. You can go for HDFC Prudence or DSPBR (DSP Blackrock). They have done more than 20 per cent for the last five years.
Satheesh Balasubramanian, 30, software engineer from Chennai: I am planning to invest in a property. At this moment I am not sure if it's going to be a plot/land/flat. Currently I have an outstanding loan of around Rs 42 lakh on my current flat in Chennai. New IT (information technology) parks are coming up near Siruseri in the city outskirts. Land costs approximately Rs 1,000/sq. feet in this area and a flat costs around Rs 2,500/sq.feet. Given that IT companies will be moving to this new IT park in future, I am tempted to invest in Siruseri. I currently hold around Rs 9.5 lakh in stocks and mutual funds with decent profits. Should I invest in land where I will get decent appreciation in next couple of years? Or should I invest in stocks?
Natarajan: Your portfolio needs much more of stocks and mutual funds before you go and dabble in land as an investment. Every one that I have spoken to in Chennai is making a beeline for Siruseri for investment. There are more than 10,000 flats that are coming up in this area. So here is my worry: this area is attracting more investor money than real home buyer money and you could have a bubble-like situation.
My advice is: build a corpus of at least Rs.30 lakh in stocks and mutual funds, may be even Rs 40 lakhs…when you have your savings in mutual funds and stocks that are at least 10-15 per cent higher than your
outstanding loan amount, that's the time when I will tell you to go and dabble in land. Not before that.