Investment query for someone needy

ashish

ashish

Adept
This query is for some needy friend.

She earns around 25k pm.
Pays 10k rent and stays with husband who is off the job due to some issues.

She want to invest somewhere for next 2-3 yrs at least.

By her bank she was suggested SIP of 5 k pm for next 3 yrs which will yield some 12% thereafter.

I found those returns too low and asked to wait and came at your guys.

After a year or she can increase her monthly investment to 10k or even more.

So please suggest something worthy in her budget from returns point of view with low risks and flexibility of increasing the monthly contribution.
 
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12% per year is double what bank FD's or much more that other options like PPF etc give. What is low in that? Gone are those days where we saw 20-25% returns. Market has stabilized now.
The only thing that will give good returns is Mutual Funds, but even that area is seeing negative returns or very low returns from past year. There's just too many funds now and too many investors too. The places where the fund management is investing is not giving returns or showing signs of economic recovery. This is actually a bad sign for India going forward.

Try investing in MF NFO's to maximize returns or go for funds that have 12%+ returns in past year. Some funds like Reliance Vision fund and HDFC Balanced Advantage Fund have given very good returns in past few years till now. Avoid bank stocks, power industry, automobile industry, small caps, engineering, entertainment and reality stocks. These are worst performing stocks from years. The only reason they go up/down is because of day to day punters. This is what I see and where I lost money for not paying attention to the market (my fault). There are good stock in them but you need to grasp the fundementals on how to search those stocks out of the mess.

Another way is to ask for advice from those companies that give investment advice as a service. I think they give timely advice on when to buy and sell stocks etc for a fee.
 
ashish said:
This query is for some needy friend.

She earns around 25k pm.
Pays 10k rent and stays with husband who is off the job due to some issues.

She want to invest somewhere for next 2-3 yrs at least.

By her bank she was suggested SIP of 5 k pm for next 3 yrs which will yield some 12% thereafter.

I found those returns too low and asked to wait and came at your guys.

After a year or she can increase her monthly investment to 10k or even more.

So please suggest something worthy in her budget from returns point of view with low risks and flexibility of increasing the monthly contribution.
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12% is pretty good tbh. SIP will be good for her who's new to investing. You can also increase the amount periodically.
 
Ok this 12% was for icici.
Are SIP rates different for different banks?

And what if she wants to go for hdfc just for Sip, does she requires to open a savings account there?
 
I think icici direct will take brokerage per investment like 25-50 rupees or something every time she invests 5000 per month which will add up to a lot. I have an icici direct account and i stopped using it years back because of their huge fees for small investors. All their fees is designed for large everyday investors who do lakhs of business. Poor people are like small fish to them.

I say its better to go directly to MF amc office and get your investment folio, website user id and login details, kyc etc done from there. It will take like 4-5 working days to get everything done once you fill out form and give blank cheque for linking your bank account with the mutual fund house. i think you need pan, aadhaar, and bank cheque book and ifci code.[DOUBLEPOST=1551965002][/DOUBLEPOST]
ashish said:
And what if she wants to go for hdfc just for Sip, does she requires to open a savings account there?
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no, they take any bank account money and transfer money to any bank account. Redemption transfer time is usually 7-10 days though.

Looks like they got even more greedy now.
Code: 
How does the new fee structure apply to my unit holdings of less than Rs. 8 lakhs?

If the cumulative MF investment you have with us is less than Rs. 8 lakhs, you only pay nominal charges on each transaction.

Mutual Funds - Fee Structure 	Rs. per transaction
For SIPs 	30/- or 1.5% whichever is lower
For Lumpsum investments 	100/-


Is GST included in the ICICIdirect Service Charges?

No. GST will be levied additionally on the ICICIdirect Services Charges, as applicable.
 
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ashish said:
By her bank she was suggested SIP of 5 k pm for next 3 yrs which will yield some 12% thereafter.
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This sounds like a ULIP. Avoid if it is.

If they're looking at low risk, there's no option other than liquid funds.

ashish said:
And what if she wants to go for hdfc just for Sip, does she requires to open a savings account there?
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Banks are different from AMCs where you open a mutual fund folio.
 
I would suggest to first outline the gains and the risks associated with each. Since her husband is not earning now, she is the sole earner. What is her age? Ask/or contribute more details. Would suggest to build a risk profile or the likes.

With these in mind, is MF or the likes advisable? It might be prudent to put some money which will not reduce considerably due to associated risks like this being an election year and other reasons. I am not very fond of FDs (bank/company), but these are pretty safe upto a certain point. Look at other avenues as well....
 
adventureguy said:
I hope she has an emergency fund saved up before she starts investment. Save atleast 3months' salary as emergency fund before starting investing. Also, let husband find a a job asap
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I think this cannot be stressed enough.

@ashish I guess this thread is related somehow?
https://www.techenclave.com/communi...loitation-salary-negotiation-shameful.189178/

It sounds like your friend must be feeling lot of stress. Especially on the monetary front. Wanting to grow money faster and faster.

Here's my advice from knowing someone who has gone through this.

First, @adventureguy is correct. She needs to secure herself financially in cash. That means she first needs to save up a years worth of monthly expense. One of the ways, I have seen a couples do this is by shifting to PG accommodation for sometime. That should lower the expenses drastically.

Second, DO NOT buy any SIP/MF etc. Because, one ,unfortunately it is crossroads like this which leave us vulnerable - either to con men or people offering smooth and easy way out. Equity investing requires due diligence and this is difficult when you feel pressured to make life changing decisions. Two, this is a long term game and when we go through such stressful situations, we tend to get easily panicked. So, any kind of losses might not be bearable.

Third, invest in Fixed Deposit - 1, 3, 5 Yrs. It is not ideal but she will be assured to always have her money and keep it growing too.

Think about equity investing only after they are back on their feet.
 
@6pack
icici direct ?? She has her own savings account in ICICI and she last week visited the branch for some work there the investment relation officer suggested her upon her request what will be the best since then she is pressing on SIP in ICICI. Dont know if she goes via this way if still ICICI will charge her any monthly fee as you said some 30 bucks.

Will walking to an MF amc office clear all the air regarding investment? Will they be in a better position to assist on even more options?

@Crazy_Eddy
It pure SIP no idea about ULIP etc.

@vivek.krishnan
Her age is 31. FDs is the last safest bet but with hardly any higher gains.

@adventureguy
Yes she has almost 6 months of salary as savings.

@abhi1984
Nope the thread was for my ex colleague. Nothing related to the people associated in this thread.
 
What is the goal first of all. Short term or long term.

For long term with low income, I would say first max out options like PF/PFF which are exempt from taxes and have no risk and post that, ELSS Mutual funds which do have risk associated, but can give returns of up to 20% on average.

For short term like 3-5 years, Ultra Short term debt funds give annual returns of 9 to 9.5% with little volatility and minimal risk. If taking out the money at short notice is a requirement, then liquid funds and fixed deposits are the options.

Banks tend to push ULIP plans to everyone these days, but I would much rather put the money in the solution that I need than in a jack of all trades instrument that the banks seem to have a very keen interest in pushing over everything else.


abhi1984 said:
Can we please not encourage people in need to buy moon shots? They need money to survive not play whack-a-mole with their life savings.
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Can't agree more. Its the equivalent of asking them to buy lottery tickets with what little savings they have when the lottery itself could be shutdown.
 
I would suggest her to take up investment as a learning approach rather than risk free approach.
1. https://zerodha.com/ or something similar to robinhood in India.
2. invest in individual stocks. learn about company and its values. focus on long term investing rather than making quick buck. learning about monitory policies, quarterlies of companies etc...
3. invest in small quantities, like few shares every few months.
4. learning the domain knowledge. for example, I would invest in companies like AMD, MS etc... because I understand the field. rather than investing biotech pharma just because some analyst increased their rating and called it hot stock.
5. initially she would get attracted to pump and dump schemes just because everyone likes to make quick money. but, looking at investing as learning process will make it better on a longer run.
6. lot of youtube videos. Ashwat Damodaran's valuation series lectures, Warren Buffet and Charlie Munger, Ray Dalio's www.principles.com etc...
 
ashish said:
Ok this 12% was for icici.
Are SIP rates different for different banks?

And what if she wants to go for hdfc just for Sip, does she requires to open a savings account there?
Click to expand...
SIP is just an ËMI Way"of investing in any mutual fund. So most funds have the SIP method.
 
ashish said:
This query is for some needy friend.

She earns around 25k pm.
Pays 10k rent and stays with husband who is off the job due to some issues.

She want to invest somewhere for next 2-3 yrs at least.

By her bank she was suggested SIP of 5 k pm for next 3 yrs which will yield some 12% thereafter.

I found those returns too low and asked to wait and came at your guys.

After a year or she can increase her monthly investment to 10k or even more.

So please suggest something worthy in her budget from returns point of view with low risks and flexibility of increasing the monthly contribution.
Click to expand...
Next 2-3 years is a short time. She can invest in the best of funds and still have negative returns for 2-3 years (it is possible) or she might get 25%+ returns. No one knows what will happen. Where did you get the 12% figure?
 
Mutual funds/stocks would require lot of diligence from investor side. As mentioned above, MF can end up in the negative or positive in 2-3 years. There is no guarantee.

In addition to the suggestions above, she could also consider iWish (a form of flexible RD provided by ICICI). She could increase or decrease or make no payment in some months depending on her financial status then. However, interest rates are low, as expected.
 
With low income, people tend to take the risk averse route and it's a good thing too.You never know when you need to take out some money. Speaking from experience here as I have a widowed cousin with low income and parents both of whom are not in good health. She works long hours and has a lot to deal with on her mind.

Equity is not a good idea for such people given the learning curve, volatility and the amount of stress they already have to go through. They need investment options that are simple and flexible and don't add to their worries even more. A stable rate of positive returns is preferable to returns that could swing between from 20% to -20%

For short term, Ultra short term debt funds and bank deposits (FD, RD) are good. For long term, PF, PPF and ELSS. The later are also help save taxes.
 
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