Products Suitability

For Rs.50 Lacs A mix of following options could be considered (1) Senior Citizen Savings Scheme (SCSS) (2) Short term accrual debt funds (3) Systematic Transfer Plan (STP) from debt fund where only capital appreciation amount is transferred to equity fund.

For Rs.25 Lacs – A mix of balance funds and multicap funds could be considered.

Note: Don’t offer him midcap and small cap funds. SCSS offers decent and guaranteed interest rates which could be equal to or more than debt funds with no volatility. It is not necessary to target all money in mutual funds.

Disclaimer: Every investor is different. There could be multiple solutions to the same case. Apply your own judgement and prudence.

SIP in equity mutual funds could be most suitable for him. Since his time horizon is long, he can adjust to the volatility of returns. Also, since he is contributing to EPF and have term insurance cover, any potential risk could be managed better.

Avoid sector funds. Don’t give 100% small cap. It’s better to have a mix of multicap, midcap and may be a small amount in small cap funds.

Disclaimer: Every investor is different. There could be multiple solutions to the same case. Apply your own judgement and prudence.

Balance fund should be most suitable to him. While pure equity funds could also be considered but since he is investing in mutual funds for the first time, it will be prudent to be a little conservative. As his comfort grows, future investments could be considered in equity funds with similar time horizon.

Note: Be extra safe with first time investor. Don’t expose them to high volatility products. First, let them understand volatility and become comfortable.

Disclaimer: Every investor is different. There could be multiple solutions to the same case. Apply your own judgement and prudence.

You can consider accrual debt funds with low to medium duration for her. A part of the amount could be invested through STP provided you explain the volatility of equity part. May be, 10-20% of the corpus could be suggested in a dynamic asset allocation balance fund.

Note:  Although she may have reasonable time horizon but she is averse to risk and her knowledge is limited. As such, equity schemes should be avoided. Capital preservation should be a top priority.

Disclaimer: Every investor is different. There could be multiple solutions to the same case. Apply your own judgement and prudence.

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