I want to invest Rs 6,000 per month in mutual funds for at least 10 years. Please suggest funds. I am 29 years old. Is life insurance necessary? Which type of insurance (term or normal or whole life) and insurance company should I choose?
– Rajesh Dawola
We typically ask investors to choose mutual funds based on their financial goals, investment horizon, and risk profile. You have only given your investment horizon. You have not mentioned anything about your goal or risk profile. Without these details it will not be possible to offer specific recommendations. However, here are some pointers you may use.
Since you have a 10-year horizon, you may consider investing in equity mutual funds. That is, if you have the necessary risk appetite and ability to withstand volatility. Further, you should choose an equity mutual fund category that is in line with your risk profile. For example, conservative investors are typically asked to invest in large cap funds. Moderate investors should choose multi cap mutual funds. Aggressive investors may choose mid cap and small cap schemes.
If you are not very clear about these things, you should seek the help of a mutual fund advisor.
If you have financial dependents or people who are dependent on you financially, you must get an `adequate’ life insurance cover. The insurance cover must be large enough so that your family can park the insurance proceeds somewhere safe and earn an income to lead their life comfortably if something happens to you. Pure term plans are considered ideal to buy life insurance cover. These plans do not offer you any returns. If you die during the term, your family will the get the money. If you outlive the policy, you will not get anything. Term plans charges very low premium. Because of this you can buy a very large insurance cover by paying a small premium.
Do not buy insurance products with saving or investment element in them. They have very high premium rates. You will not be able to buy a large cover with them. They also offer you modest returns.