I got my first job with an MNC and save 80% of my salary. Where should I invest it?

I am 22 years old, and recently got placed at an MNC with a take-home salary of Rs 35,000–Rs 40,000 per month. I have allocated Rs 7,000 for personal expenses and want to invest the rest. Please guide me on how to start my investment journey

Adhil Shetty CEO, BankBazaar: Congratulations on your new job! It’s great that you are thinking about investing early. Here are three key steps to get you started: l Assess your savings potential: Give yourself the first three months to understand your spending pattern. If you plan to limit your monthly expenses to Rs 7,000 and invest the rest, ensure that this is realistic and sustainable. l Build an emergency fund: Aim to save three-six months of your salary as an emergency fund. Start with a recurring deposit or a fixed deposit. Focus on capital protection, not returns. This fund will help you handle unexpected expenses. l Set clear financial goals and invest accordingly: Identify your short-, medium-, and long-term goals. For goals within three years, stick to fixed deposits. For long-term goals, consider investing in passive index funds such as the Nifty 50. For medium-term goals, go for a balanced mix of equity and debt. The secret to successful investing is consistency and discipline.

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I’m a 26-year-old government employee without any dependants. I can save Rs 30,000 per month. Where should I invest to keep my money safe?

Since you are young, with nearly 34 years of working life left till you retire at 60, I suggest you take risk and invest in equity mutual funds in order to create wealth. You can either consider investing in well-diversified equity funds or create a portfolio mix of large-cap, mid-cap and small-cap funds of different styles. If you are unable to pick the right funds, you can simply invest in the Nifty 500 Index Fund. To give you an estimate, assuming a 12% CAGR return in equity for 34 years, Rs 30,000 invested per month via the SIP route shall help you build a pre-tax corpus of Rs 17.25 crore. As and when your salary increases, increasing your SIPs by 5% annually could help you accumulate around Rs 26.36 crore (pre-tax). Equity as an asset class is volatile, but if you remain disciplined and invest in it for the long term, risk can be minimised. Equity is the only asset class that will help you beat inflation comfortably.

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