I want both growth & capital protection?

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Dear Fpguru

I have a surplus of 5 crores. I need advice on how to allocate my funds to get the best return. My goals are to beat inflation and keep my capital fairly intact.

 

Thank You

Lalit

 

 


 

Dear Lalit

We thank you for visiting our website. The question you have asked is a common question asked by many investors. Everyone wants ‘best returns with full safety’. Well this is like asking to have your cake & eat it too. Risk and return are twin sisters and go hand in hand. Higher the return from a portfolio higher will be the risk.


Appropriate allocation of funds requires understanding and setting your financial goals. Each investment is to be made keeping in mind the time horizon of each goal & your ability to undertake risk.  Each individual differs in their risk tolerance level and hence no two fund allocation plans can be similar.

 

In order to get the best return, you must invest in equity and real estate which is meant for long time horizon. In the short run these asset avenues may depreciate even below your capital, but with time the volatility reduces. On the other hand, if your priority is to keep your capital intact with moderate returns, it is preferable to have a good debt portfolio mix which can include a combination of FD’s with different maturity periods, different interest rates and Public provident fund.


Returns from equity and real estate will help beat inflation most efficiently but with short term volatility. A good debt portfolio mix can match inflation while keeping your capital intact.


We suggest you to first understand & set your financial goals. This will ensure that you know what the time horizon for investment is. Accordingly the right asset allocation can be prescribed. You can attempt the same by making a financial plan. We at fpguru.com make free plans and hope we can provide you better insight through the same.

 

Hope this solves your query!

Regards,

Fpguru.com

Comments  

 
0 #1 vijay jain 2012-05-16 06:55
i can save 5000 per month for next 7 years and i am moderate risk taker. i want to limit my equity exposure to less then 50 percent.suggest me where to invest and my required rate of return is 12 percent per annum
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