If you wish to invest around Rs 2-3 lakh every year, term insurance can be a good idea if one goes for a high sum assured plan. However, for fulfilling a long term goal of children's education or while planning retirement, investment in equity can be a better bet, Pankaj Mathpal, Managing Director of Optima Money Managers tells CNBC-TV18.
Funds like DSP Blackrock Top 100 Equity Fund or HDFC Top 200 Fund, IDFC Premier Equity Fund or HDFC Midcap Opportunity Fund can significantly boost one's portfolio when planning for the long term, opines Mathpal.
When an investor is looking to maximize investments within a 5 year tenure, Mathpal believes SIP or STP can be of great help.
Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.
Q: Can invest Rs 2-3 lakh per year. How should I allocate this money? I have three dependents and I am investing Rs 1-1.5 lakh in insurance every year.
A: He has two dependents and he has told what premium he is paying but, the sum assured from the insurance is more important. I will suggest that he have term insurance plan because that serves the purpose of insurance. You pay small premium for a high sum assured.
For child education, if he has a long term goal of say 10 years and definitely a long term goal for retirement, he should invest a larger portion of his investment in equity. I suggest, he invest through equity oriented mutual fund.
He should go for some good fund like DSP Blackrock Top 100 Equity Fund or HDFC Top 200 Fund. He can add midcap funds like IDFC Premier Equity Fund or HDFC Midcap Opportunity Fund to his portfolio.
Along with that one gold fund, maybe Reliance Gold Saving Fund or Kotak Gold Fund. Likewise, you can invest in some good mutual funds in equity segment as well as in gold funds. When he talks about retirement, he can also add Public Provident Fund (PPF) to his portfolio.
Q: If he has to have a target of Rs 1 crore, what would you expect him