Want to retire early? You can do it!

ot a question about your money? What you should or should not do with it?

Our expert Uma Shashikant has the answers.

I am 25 and single. I take home Rs 23,000 every month and expect a 12% hike each year.

I invest in four systematic investment plans of diversified equity funds and put in Rs 1,000 every month.

I am repaying a housing loan of Rs 12 lakh (Rs 1.2 million).

Now, I am eager to invest in gold and shares. I want to retire soon and be financially self-sufficient when I do. Say, in another 20 years, when I am 45. Any specific strategy for that?

- Jitin Arora

Focus on building your wealth. Gold is more a hedge avenue for inflation and currency risks. It has not historically provided a high level of return, though the depreciation in the dollar has turned much of the attention to gold, the world over.

Equity shares are a good way to build your wealth. But you must have the patience and discipline of a wealth builder, and stay away from taking speculative bets.

If you choose to buy shares yourself, be careful about what you buy. Take the time to know the business and understand the numbers.

Even if you carefully picked one or two stocks a year, in 20 years, you could create a blue chip portfolio for yourself, which will be highly valuable.

A more sensible approach is to invest in a diversified mutual fund. Even assuming a 12% return, Rs 10,000 set aside every month, for 20 years, should translate into Rs 1 crore (Rs 10 million).

However, discipline is the key, whether you use mutual funds or invest directly.

How to invest in a mutual fund

I am 28 and earn Rs 600,000 per annum. My husband earns less than me (Rs 400,000) and his income often gets delayed.

Each of us has an insurance cover and the bulk of our savings is in NSC, bonds and PPF.

We invest a small portion every year in a diversified equity fund (ELSS). We have a 20-year home loan of Rs 10 lakh (Rs 1 million) and our EMI is Rs 8,210.

We save around Rs 100,000 every year.

Should I increase my EMI to Rs 12,000, and reduce the tenure to 10 years or invest this amount where I would get returns?

Which is the best insurance policy for my nine-month old daughter?

- Pooja Bedi

Your investments seem to be more skewed towards debt. You should invest some more in equity.

Yes, you should increase the home loan EMI to a level that is affordable to you and gives you the tax benefit. At your level of tax, to pay the home loan is a better choice.

Your daughter does not need insurance -- she is far away from enjoying any earning power of her own, nor does she have any dependents.

Increase your investment in the equity linked tax saving scheme. Perhaps you can use a monthly investment option to make it easier.

Your savings of around 10% of your earnings is low at your age. See if you can take this to 20% and manage to save Rs 1 lakh each.

You will save on the taxes, and do better in the long run.

I am 27, recently married and take home Rs 31,000 every month.

I have a loan of Rs 20 lakh (Rs 2 million) and will start repaying it from June. It will amount to Rs 13,000 a month for three years.

I think I have invested too much in insurance (Rs 50,500 per year and Rs 10,000 pension scheme). These are my savings.

I took a policy a year ago with Rs 26,000 per annum as premium and paid Rs 40,000 till date.

Now I want to close this (I will lose all this money), and invest this money (the next premiums which I have to pay) in mutual funds or ELSS or IPOs. Am I doing the right thing?

I don't have a PPF account and somehow did not like it!

- RajaSekhar Chowdary

At your age, you do seem over insured. But you don't have to lose what you have paid. Retrieve at least the surrender value, if you are keen to close out.

You should consider equity mutual funds, they are safer than IPOs.

Invest systematically every month.

You should have a saving ratio of at least 20% of your earnings. Invest most of it in equity, but keep away from speculation and gambling on the markets. Invest in the best, and you should be fine.

To save taxes, consider having a PPF account. It is still the most tax efficient of all. You can also increase your ELSS savings.

Try to build a portfolio of long term investments, both in equity and debt, perhaps a 80:20/ 70:30 ratio is fine at your age. And the returns will be fine enough for you.

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