Long Term vs Short Term Investments: The Only Framework You Need

By
Hemant Beniwal
-
133
Long Term and Short Term Investments

Last Updated on April 21, 2026 by teamtfl

“The investor’s chief problem – and even his worst enemy – is likely to be himself.” – Benjamin Graham

A client came to me years ago with what he thought was a simple question. He had Rs 8 lakh saved and wanted to know where to invest it. His daughter’s engineering college fees were due in 18 months. He had also just started thinking about retirement, which was 20 years away.

When I asked him what he was currently doing with the money, he said: “Both are in a mid-cap mutual fund. I heard mid-caps give the best returns.”

The mid-cap fund was fine for his retirement money. It was completely wrong for his daughter’s fees. In 18 months, that fund could easily be down 30-40% if markets corrected. He was using a high-speed vehicle for a short journey – and risking arriving with a fraction of what he started with.

The single most important investment decision most people make is not which specific fund or stock to pick. It is matching the investment vehicle to the time horizon of the goal.

⚡ Quick Answer

Use equity for goals that are 7 or more years away. Use debt for goals within 3 years. Goals between 3-7 years warrant a mix. This is not a complicated rule – it is the foundation of all sound financial planning. Violating it – equity for short goals, debt for long goals – is the most common and most expensive investment mistake Indian investors make.

Long term and short term investments framework - equity for long term, debt for short term

The Vehicle Analogy: Why the Right Tool Matters

Imagine you need to go to a grocery shop 500 metres away. You would not take an airplane – it is too slow to warm up, too expensive to operate, and completely wrong for the distance. You walk or take a scooter.

Now imagine you need to fly to Canada. You would not walk or cycle – the journey would take years and you would never arrive.

Investment vehicles work the same way. The right vehicle depends entirely on how far you need to travel – meaning, how much time you have before the money is needed.

Short distance (under 3 years): use slow, stable vehicles – debt instruments. Fixed deposits, liquid funds, short-duration debt funds, money market funds. These do not grow spectacularly, but they also do not lose 40% of their value in a correction. For short goals, capital preservation is more important than capital growth.

Long distance (7 years or more): use high-speed vehicles – equity. Equity mutual funds, index funds, direct equity for those with knowledge. These are volatile in the short term – they go up and down every month, sometimes dramatically. But over 10-15 years, equity in India has consistently beaten inflation and created real wealth. The journey is rough but the destination is worth it.

Medium distance (3-7 years): use a hybrid approach. Balanced advantage funds, aggressive hybrid funds, or a manual combination of equity and debt. The equity component provides growth potential; the debt component provides stability if markets are weak at the time you need the money.

Ownership Assets vs Lending Assets: The Core Distinction

Behind the equity vs debt distinction is a deeper concept that every serious investor should understand.

When you invest in equity – whether directly in shares or through equity mutual funds – you become a partial owner of businesses. Ownership is inherently uncertain in the short run: businesses face competition, economic cycles, management decisions, and market sentiment. In the short term, ownership can produce losses. Over the long run, well-run businesses grow, earn more, and become more valuable. Ownership assets create wealth over time because they participate in economic growth.

When you invest in debt – FDs, bonds, debt funds – you are a lender. You give money to someone (a bank, a company, the government) and they pay you a fixed interest rate in return. Lending produces predictable, steady returns. But because the returns are pre-agreed, lending assets do not participate in upside. They preserve your capital and provide a return roughly in line with inflation plus a small premium. Lending does not create wealth; it protects it.

“In 25 years of practice, the most expensive mistake I have seen clients make consistently is using equity for short-term goals. Not bad fund selection. Not wrong timing. Wrong vehicle for the journey. When the correction comes – and it always comes – the money they needed in 18 months is worth 60% of what it was.”

– Hemant Beniwal, CFP, CTEP | Founder, RetireWise

Why Most Indian Investors Get This Backwards

The pattern I see repeatedly in client portfolios is this: short-term goals funded with equity, long-term retirement corpus sitting in fixed deposits.

The equity in short-term goals makes sense psychologically – equity seems exciting, it has recently delivered good returns, and “why keep money idle in a fixed deposit?” But the Rs 5 lakh needed for a child’s admission fee in 14 months cannot wait for equity markets to recover from a 35% drawdown. When markets fall, the timeline does not extend. The fees are due when they are due.

The FDs for retirement make sense emotionally – “safety” feels responsible. But a 30-year-old putting retirement money in FDs at 7% (pre-tax) earning 0% real return after inflation and tax will arrive at retirement with a corpus that has not grown in real terms. The journey to retirement takes 30 years. Debt cannot cover that distance.

Are your investments matched to your actual goals and timelines?

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Applying the Framework to Retirement Planning Specifically

For someone at age 40 with a retirement target at 60, the retirement corpus goal is 20 years away. This is firmly long-term territory – equity should be the primary vehicle, with debt providing a stability buffer.

At age 55, with 5 years to retirement, the goal has moved to medium-term. The equity allocation should begin reducing, and the portfolio should be transitioning toward a more conservative mix. This is not about fear of markets – it is about the math of time horizons. At 55, there is not enough time to recover from a 40% drawdown before the corpus is needed.

At age 60, in retirement, the picture splits again by timeline. Monthly living expenses needed in the next 1-2 years belong in short-term debt instruments. A corpus providing income for years 5-15 can retain meaningful equity exposure. A corpus providing for years 15-30 should be predominantly equity. Retirement itself is a long journey – not all the money is short-term just because you have retired.

Read – ETF and Index Funds India: The 2026 Guide for Retirement Investors

Read – Why Fixed Deposit Returns Are Always Negative in Real Terms

Frequently Asked Questions

I am 55. Is it too late to benefit from equity?

No, but the allocation needs to reflect your proximity to retirement. At 55 with retirement at 60, you have 5 years to accumulation – the medium-term range. A 40-50% equity allocation with the rest in debt is reasonable for this stage, depending on your risk tolerance and existing corpus. What you should not do is either extreme: all equity (too much sequence-of-returns risk near retirement) or all debt (too conservative for a 25-30 year retirement horizon after you stop working). In retirement, equity remains relevant for the portion of corpus not needed for 10 or more years.

My child’s education is 8 years away. Should I use equity?

With an 8-year horizon, equity is appropriate. An 8-year period gives sufficient time for equity to recover from most market cycles. A reasonable approach: start with a higher equity allocation (70-80%) and gradually shift toward debt as the goal approaches, reaching 60-70% debt by the time you are 2 years out. This “glide path” approach reduces risk as the timeline shrinks without abandoning equity entirely during the growth phase.

What debt instruments are best for short-term goals?

For goals under 1 year: liquid funds or money market funds (better post-tax returns than savings accounts for most investors). For goals 1-3 years: short-duration debt funds, FDs (for simplicity), or arbitrage funds (taxed as equity, useful for investors in higher brackets). For goals 3-5 years: medium-duration debt funds or a mix of FDs with some equity in an aggressive hybrid fund. The right choice also depends on your tax bracket – for investors in the 30% slab, debt mutual funds (with indexation benefits where applicable) have historically been more tax-efficient than plain FDs for 3-year-plus horizons.

Every investment goal has a natural home. Short goals belong in debt. Long goals belong in equity. Mixing them up – putting short-term money in volatile assets or long-term retirement savings in zero-real-return debt – is not caution or aggression. It is just the wrong vehicle for the journey.

Match the vehicle to the distance. Everything else follows from there.

Want a retirement plan that maps your investments correctly to your goals?

RetireWise builds plans where every goal has the right vehicle and the right timeline – not just a generic allocation.

See Our Retirement Planning Service

💬 Your Turn

Look at your current portfolio. Are your short-term goals funded with debt and your long-term goals funded with equity – or is it the other way around? Share in the comments.

133 COMMENTS

  1. I am investing in mutual funds for the last 1 year as per detail below:
    Axis Long term Equity- 3000
    ICICI Pru Bluechip- 1000
    Mirae Asst India equity- 1000
    HDFC Mid cap opportunities- 1000
    L&T emerging business- 1000

    I am thinking to add 5000 more to my investment and to stop Mirae Asset India Equity as it has been converted to Large Cap.
    I have planned to make following changes:
    Kotak Standard Multicap- 2000
    Mirae Emerging Bluechip- 2000
    HDFC Mid Cap Opportunities- additional 1000

    My target is to have 1 crore in next 15 years and another 2 crores after 30 years.
    Please suggest, are the above funds right?
    Thanks in advance

  2. I am investing in mutual funds for the last 1 year as per detail below:
    Axis Long term Equity- 3000
    ICICI Pru Bluechip- 1000
    Mirae Asst India equity- 1000
    HDFC Mid cap opportunities- 1000
    L&T emerging business- 1000

    I am thinking to add 5000 more to my investment and to stop Mirae Asset India Equity as it has been converted to Large Cap.
    I have planned to make following changes:
    Kotak Standard Multicap- 2000
    Mirae Emerging Bluechip- 2000
    HDFC Mid Cap Opportunities- additional 1000

    My target is to have 1 crore in next 15 years and another 2 crores after 30 years.
    Please suggest, are the above funds right?
    Thanks in advance

  3. Hi Jahnob,
    You should never mix insurance and investment. Jeevan Anand plan is an endowment plan which will not give you return more than 4-5% per annum. It is advisable to paid-up your policy (Discontinue Premium) & buy a term plan with adequate cover & for your long-term goals you can start investing in equity mutual funds through SIP.

  4. Good afternoon sir,
    I want to share some my investment issue with you.
    I have one Jeevan Anand policy for 1C which one I am paying premium 8 Lacs/year.
    I already paid 26lacs & bonus accumulating 14 Lacs.
    What’s your suggestion, should I continue the policy or invest in Equity policies?
    My main requirement is my family security & financial growth as well.
    Your valuable suggestion will highly appreciated.

  7. Hi Hemant,
    Got good know ledge on long term investment, I have one question.
    I want to invest some money on monthly basis for retirement plan looking for long term(15 to 20 years years ) investment, could you please suggest me which fund would be good for me like Mutual fund , equity fund or ELSS

    • Hi Shishir,
      You can invest in equity mutual funds for a long-term perspective. It is also advisable to get in touch with a financial advisor for retirement planning.

  8. thank you sir,good information.i am maintaining 5 folios of various mutual fund SIP s on the advice of our financial adviser.perfomance of that funds are fine.i am just searching on internet regarding best MFs .i found some crisil s ranking funds.but is it better to invest next investment in that funds.

    thank you
    shrinevas

  9. A very informative article especially for the beginners. Keep it up, Hemant and continue to help the investors through your writings.

  11. Dear Hemant,
    My monthly income is 20,000 per month. I have 2 daughter. I want to plan for them education and marriage. Please advice me to plan for them best future.

  12. Hi,
    Thanks for this nice article as it helped us in understanding what short, medium and long term investment is.As a investor it is really tough to believe every adviser as they have there short medium and long term goals.
    Your articles in this regards can be used as reference so please keep sharing..
    thanks

  13. hi hemant
    i have almost 2.5 lac n want to invest in long term. can u name me few place n how to go about in investing this money.
    regards

  14. Dewan housing Finance LTd are offering interest @10.5 % compounded half yearly for RD schemes ( tenure up to 7 years.). Detail is also available on their web site.

    Pl guide about investing in RD w.r.t. to return and safety.

    Rastogi

  15. I am retired person. I have invested about 20 lacs in Bank fixed deposit scheme.I am earning about Rs. 18000/- per month. I need monthly income. Is there any other way to increase my income.

  17. Kindly let me know the income tax implications in following categories:

    1) STCG & LTCG for liquid funds
    2) STCG & LTCG for low duration funds like templeton India low fund.

    Are both of above taxed as debt schemes?

  19. Hi Hemant,

    I agree with your conclusion:
    “Investor make mistake of choosing wrong vehicle for their investment. Practically, Equity should be for Long term and Debt for short term, but investor do the opposite, Equity for short term and debt for long.”

    I have understood that, if I have a surplus money (say 20 lac) that I am not going to spend in the next 5-6 years, then it is wise to INVEST IN EQUITY.

    But practically ALL equity instruments do not perform good. Majority (~70%) tumble down and only a minority (~30%) go high. And no one can predict which MF will go high; that is the risk factor; or a gambling game.

    In that case 50:50 Equity:Debt formula is the only solution left to a common man.

    Anyway, if YOU have to invest 20 lac for a period of 5-10 yrs, how would you diversify? Which equities will YOU choose today?

    Best Regards.

  20. Dear Hemant sir,

    I read your articals it is very nice. I am new investor and I want to invest in mutual funds through SIP based on my research and suggestion from friends I found HDFC tax saver and HDFC advantage are giving good returns based on there past performance . My budget is to invest 2000 per month in any plan. Please suggest me which is good and which will give high returns.

    Thanks.

  21. I have been investing Rs. 30,000 in LIC Jeevan Tarang since 15/10/2007.
    So i have already invested for 5 years and my next premium is due on 15/10/12.
    Maturity will be on 15/10/2021.
    Could you please guide me if I should continue this policy as it is difficult for me to raise 30,000 every year as i am married now and have a year old baby boy. Also i had to quit my job after the baby was born.
    If i don’t pay the premium what happens? When will i get my money back? Is it better to take the money back or let it continue without paying the premium?
    Can you suggest something better to put the money elsewhere and get better benefit? The monthly household income is around 12000 a month.

  22. dear sir
    kinldy help me to achiv my goals as per following portfolio

    1.I want 500000 lac rupees after 15 years
    2.Which mutual funds are suitable to invest to achive my goals.
    3.Following are my investment in mutual fund.
    sr no funds name monthly SIP year
    1 hdfc top 200 1000 15
    2 reliance growth fund-retail plan-dividend plan 1000 15
    3 sundaram tax saver (open ended)-growth 1000 15
    4 HDFC EQUITY 1000 15
    5 DSP BLACK ROCK EQUITY FUND 1000 15
    can i achive my goals from above investment,if not then please suggest.
    4.is it ok to invest only in one mutual fund rs.5000/- month
    5.How much i have to invest to achive my goal.

  23. hi sir,
    thanks for clearing my concept of long ,short and middle term.
    i dicided to open ppf account first to invest 2000k/mth.
    i want to ask where to open..sbi or icici.
    i read somewhere that icici is not issueing passbook..and one can not getting any proof to get 80 c rebate..
    is it true?
    i want to open in icici because nearby sbi branch did’nt have facility.
    please advice..thanks in advance..

  24. hello sir,
    i want to start some SIP mutual fund in monthly from account.
    so plz sagest now best mutual funds plan for the good returns.

    THANKS ANURAG SINGH

  25. sir,
    I am now 32 years old. I have 2 1/2 year old male child. My wife(31 years) and me are salaried; 70,000/ month is my salary; my wife’s salary is 35000/ month. Both of us are doctors( I am a neurologist) and practising also with additional income of about 20000/ month. We started earning only for the past 1 year after completing our PG Course.We have traditional insurance policies.

    myself: 1.Jeevan anand 20,000/ yr, DOC: 2/2006, 25 years
    2.Child career plan LIC: 28000/ year; DOC 1/2012, 17 YEARS
    paying EMI for personal loan 12000/ month ( 5 lakh, on 7/2012)

    my wife: Jeevan anand 12500/year, DOC: 3/2007; 25 YEARS.

    I am trying to get financial literacy only for the past 6 months. I consulted a financial planner with the following goals.

    1. Adequate life insurance coverage with a good term insurance for me and my wife.

    2. health insurance policy with adequate benefits

    3. long term savings over a period of 20 years with the aim of my child’s higher education and comfortable retirement

    My financial planner behaved exactly in the same way as defined by you in an article. He explained the importance of financial planning. He noted down the family expenditures, properties and income. In the next visit he had prepared extensively about the goals and plan. He explained to save atleast 30000/ month to reach the goal. His ultimate plan is as follows.

    I. LIFE INSURANCE:

    1. LIC( amulya jeevan)term plan form me: 50 lakh for 20 year coverage (14,000/year); He told 20 years is adequate as the following SIP will give good yield at the end of 20 years; so the family members will be no longer dependent at that point of time.

    2. LIC beema gold for me: 24 lakh sum assured, for 20 years (91063/ year);

    3.LIC beema gold for my wife: 10 lakh sum assured, for 20 years(37943/year).He explained that we will get about 3,40,000 money back from LIC every 4 years from plan 2 and 3. If that money is properly invested with the 20% returns, it may produce Rs 1 crore at the end of 20 years + 36 lakhs of confirmed maturity amount. These plans in addition give extra 10 years of free insurance even after the maturity.

    II. SIP:

    1. HDFC prudent fund: Rs 15000/ month

    2. Reliance gold : Rs 5000/ month

    III Health insurance plan:

    Bajaj allianz: because, it gives comprehensive coverage like disability benefit, critical illness coverage and accident benefit.

    Is it correct to follow this. I have doubt that, is it possible for me to save such a big amount in the initial stage of curriculam. I went through several articles written by you. This plan contradicts and breaks the financial rules mentioned by you. Please advise me, should I follow this plan.

  26. Hi Hemant,

    Thanks for providing such a valuable information.

    I am working person(age -27) and need to invest 1 lac for my tax savings so can you please suggest me the areas to invest in?

  27. Hi! I am a doctor , taken VR , 53 years old, having monthly income 1.5 L , liabilities
    Housing loan 8L (Emi 15k)for 8yrs , getting about 20 L as pension maturity and 20K as monthly pension which I don’t. Need now. Want to invest for 5 yrs for proper growth. I am in highest tax bracket.
    One question : should I repay the home loan and invest 15 K in SIP or continue with the home loan and invest in mutual funds.
    Thanks

  28. A lot of thanks for a nice job,my SIP investment fromMAY 2011 in BSL frontline eqty growth Rs 1000,Kotak 50 growth Rs 1000,HDFC TOP 200 growth Rs 2000,PPF per month Rs 2000&BSL gold etf lumpsum amount Rs 8ooo per year.My time horizone is 30 years for huge money respect in RETIREMENT.Please suggest me about my investment strategy.I m salaried gov job upto 3 lakhs per annum& 32 years old.I want change BSL frontline&kotak 50 funds into another BEST performing funds.Thanks again.

  30. Hi Hemant,

    Very nice article and Thank you. I would like to ask one question. I wanted to invest like 50,000 in long term. Please advice me. If it is SIP, how can I invest and which are best ones.
    Thank you

  31. Dear Sir
    I want invest 2000 thousand rs. per month in equity mf for long term
    throw sip.
    Please suggest me about mf name.

  32. Dear Sir
    Your passage have more valuable knowledge about long term& short term
    investment And also contain the diffrence between equity & debt to new invester.

    thank for kind information.

  33. Hello Hemant,
    thanks for such a good article.my query is little diffrent .I have a home loan running .balane amount is 6.5 lacs with roi 11.5% & i am paying 12000 pm .
    I can spare another 5000pm.what makes sense: to increse my EMI by this amount or put this 5000 in rd/mf for 1 year & then deposit it as pre payment ?

    Regards
    Kapil

  34. hi,

    I did not understand the concept that we should use debt as a low vehicle for investment. How would investing in debt would give short term benefits, would you please explain it with an example?

    • Hi Leena,
      For short term goals our expectation from investments is capital preservation & high liquidity – here debt comes as a best option.

  35. sir,
    my age is 35 years. I invest in SIP in below funds, for about 15 to 20 yrs. Can you please suggest about my portfolio ? i have online term insurance plan for Rs. 30 lacs sum asured and my gpf is 1500/- pm.

    HDFC Top 200 Fund 6000/- p.m
    ICICI FOCUSED Blue chip 5000/- PM
    Fidelity tax adv. 5000/- pm
    RELIANCE RSF 2500/- pm

    with Regards
    sanjay

  37. sir kindly tell me present view on investment which is suitable iam going to retire on 2023 my salary is near one lackh so kindly suggest me which sip is suitable how much i invest pls give a good returns plans

  38. sir realy its worth to read before investment ,iam really impressed with articls which are i red thanx a lot for u r effort

  40. Hello sir,
    Agents have given me illustrations of better return through Kotak capital multiplier plan and hdfc classic assure plan. Even my financial advisor is also asking to take jeevan anand through him (62000/yr) for making my debt portfolio strong. Will u give some input on this?
    Will u suggest better debt instruments?

  41. Hi Hemant,

    I have 1.5 Lac cash and i want to invest for short term(6-12 months). Please guide me where should I invest.

  42. Hi Hemant,

    First of all I must complement you on the Financial Literacy Mission which you have taken up.
    I am 62 years old. After planning for my retirement and Medical Expenses; I had earmarked a separate sum of Rs. 10 Lacs for Wealth Creation.
    2.5 years back I invested this sum in a PMS scheme of ING VIJYA QUANT 200, a pure Equity scheme with benchmark BSE 200 and expectation of 12 -15% CAGR over 5 years timeframe.
    Although the scheme has outperformed BSE 200 after charges and all; but what I find that if I had deposited this 10 Lacs even 1 shot in HDFC 200 at that time, returns to date would have been better by appx. 5% (Rs. 50000).
    Now I seek your advice should I redeem the investment and how should I go in for meeting my goal of wealth creation for Estate purpose. I have a time frame of up to 10 years.
    Another opinion I will like to have from you.
    You may be familiar with this site MoneyWorks4me.com.
    These people talk about Equity Investment for long term and how to go about it.
    Your views on calibrated approach to Direct Equity Investments.

  43. Hi Sir,
    If possible then could you please provide me some contacts numbers of the executive or a concern person to whom I can contact for taking SIP or MF’s.?

    Tell me which is the best plans(SIP) where I can invest Rs. 1000 p.m

    Is LIC retirement plan is best for us?

  44. please guide me.I WANT TO INVEST RS.2LACS .IN DELIVERY SHARES .WHICH WILL DOUBLE THE AMOUNT IN 2-3 YEARS.WHICH SHARES I SHOULD BUY FOR THIS.

    • Hi Amar,
      If you got this answer – must share it here. I will definitely not invest in those share but try to track them for the period that you have mentioned.

  45. hi hemant ….. u r really doing very nice work … i ll definately tell my friends to read ur articles .. keep it up …
    i want to ask u : i want to invest in equity market, so doing SIP in select 4-5 stocks of different sectors for next 4-5 years and stay invest for next 15 years ……. is it a good idea ?

  46. Thank you Mr. Hemant, it was very interesting and useful information, easy to understand, I used it in my presentation 🙂

  47. Dear Hemant,
    Thanx for the article relating short &long term investment. Actually I have just started taking interest in the equity market and at present trying to understand the nitty-gritty of it. I think I have done the right thing in getting subscribed myself to your e magazine. Thank you again for the wonderful article.

  48. Hi i am tarun iam 30 Year old so please tell me where i invset .

    1) My Gole next 15 Year 10000000
    2) i am invest 10000 per Month
    3) suggest me some good sip

    • Hi Mudasir,
      Any individual portfolio depends on lot many things including & not limited to goals, risk profile, time horizon, familiarity with products etc. Will suggest you to get in touch with some financial planner at your location.

  52. Hi
    I am 60 year old and have retired in September 2011. I am a NRI and have received substantial funds as retirement benefit. Presently I made two investments as follows on advice of my Relationship Manager:
    1. ICICI Prudential Short Term Plan-Monthly Dividend (Dividend Reinvestment) for Rs. 10 lakhs
    2. IDFC-SSIF-Short Term-Plan A-Monthly Dividend for Rs. 10 lakhs
    In addition to the above, I have put in Rs. One CR in NRE account for 3 years at 9.25 % interest PA. The returns are tax free here.
    Now I am planning to invest again on the advice of my RM Rs. 15 lakhs in the following:
    1. HDFC Prudence
    2. HDFC top 200
    3. ICICI Prudential Focused Blue Chip Equity Funds
    In addition to the above I am looking at parking around Rs. 50 Lakhs in liquid funds with the following, again on my RM’s advice:
    1. HDFC Cash Management Treasury Advantage Plan &
    2. Reliance Money Management Funds
    Furthermore, I am planning to park Rs One CR in Liquid Funds to purchase commercial property.
    Please advise if I have been given correctly recommended by my RM concerning the specified investments above.
    Your advice will be much appreciated.
    Bari

  53. Hi Hemant,
    Your articles are really very useful for all those who want to make the most of their
    hard earned money. Thanks a lot for such a great job for the entire society.

  54. Hi Hemant,
    your work is very useful.I salute you. my younger brother aged 18 years&want to invest 500 Rs in mutual fund for 42 years till retirement.Please suggest best mutual fund .

  55. Dear Mr. Hemant,

    your articles are very useful. I have started investing from last year in equity mutual funds and i want to keep investing for 20 years.
    Is it possible to earn 15-16% return in 20 years?

  56. Hi hemant,

    thnx again for ur vauable inputs. after reading all this i am coming to a conclusion. i am planing to invest aprox 10K/month. out of which 3K in PPF, 5K in ELSS(already taken HDFC tax saver, 2K) and 2K in others. Need ur comments.

    Thanks

  57. DEAR Mr. Hemant,
    your articles are real eye openers for beginners and experienced investors too.
    i have been forwarding your articles to all my friends.
    keep up this wonderful job.
    rajesh

  58. Hi Hemant,

    m a new member here. read many articles here and found realy wonderful.
    a lot of useful info is given. really able to understand these concepts bcoz of ur awesome explanation.
    my requirement for investment are tax saving and regular saving.
    after reading all this i came to a conclusion to open a PPF acount, and invest in SIPs. pls correct me if m rong. but the problem is how to chose SIPs as not able to compare them. just goes over the head. 🙂

    thnx

  60. Hi Hemant,
    i already invest 50000 in samridhi plus plan in the month of april, i got units 4821 & 10.25 nav rs but now nav is 9.50, today i seen ur article realize i invest at wrong policy, please helpme out wat todo now.

  61. Hi Hemant!
    I am a single working woman, earning a monthly five-figure salary (>50,000). Since i have no dependents, how should i best invest my money ?

    Thanks.

    • Hi Pekyi,
      Its good to hear from you that you want to invest.I will tell you to go through mutual fund route through SIP rather then direct equity.This Money should be after meeting all expenses.The amount left you can invest for your retirement.

  62. Hi Hemant,
    I want to invest Rs.10000.p.m. for a period of 5-7years.I
    am a beginner in this field.Which of thefollowing U suggest me to invest Rs.2000 each/
    HDFC top200. DSPBR top100,Franklin bluechip, HDFC equity fund,SBI magnum emerging bus.(G),Franklin eq. fund,ICIcI pru. focussed bluechip equity,Hdfc midcap opportunities( G ) I hope you will kindly oblige.
    With Regards.

    • Hi Vishnu Bhat
      For investment in equity mutual funds your investment horizon should be more than five years. You can consider these funds for investment.
      1 ICICI Prudential Focused Bluechip Equity.
      2 HDFC Midcap Opportunities.
      3 DSPBR Top 100
      4 Franklin Bluechip.
      It is not necessary to invest Rs 2000/- in each fund. You can invest Rs 4000/- in the first and Rs 2000/- each in the remaining funds.

  64. I am planning to invest in SIP, below mutual funds . please advise to me good or not. its long term investment (3 to 5 years)

    1. FRANKLIN Equity Fund (G)
    2.HDFC Mid-Cap Opportunities Fund
    3.HDFC Equity Fund (G)

    • Hi Mohan
      The funds selected by you are good but you have selected two funds from one fund house which increases your risk.Moreover a time horizon of 3 to 5 years is medium term and not long term.

  65. Hi,
    I am planning to invest in SIP in two different funds, each 2,500 per month for about 10 to 15 yrs. Can you please suggest some MFs which are doing good?
    Found some of the below funds through my research, Can you share your ideas on them?

    HDFC Top 200 Fund
    Frankin Blue chip
    DSPBR TOP 100
    RELIANCE GROWTH

    Regards
    Jeevan

  66. Hi Hemanth

    First I want to say thanks to you for the Article. Now i am investing in SBI Contra fund -Growth plan as SIP (Rs.2000-00) since January 2010. and I also want to invest in gold fund as SIP (Rs.1000). Which MF I should prefer. Pls reply me.
    With regards
    Prasad

    • Hi Prasad
      It is not clear whether you are a new investor or you have invested in other funds also.If you are a new investor, the logic of investing in SBI Contra Fund is not clear.Moreover, for a new investor SIP in gold fund is not a proper choice.

  67. Hi Hemant
    It is good to know the definition of short term,medium term and long term.However for most people medium term does not exist and they consider anything more than three years as long term.

  68. Hello Hemant,

    I want to invest Rs.5K/month in SIP.Could you please suggest which will be best option for maximu returns in 10 yrs.Also I am looking for liquidity.
    How much financial consultant charge for investment planning.
    Thanks in advance

    Regards,
    Vishal Tope

    • Hi Vishal
      Nobody can suggest you best option for maximum returns.However you can hope to get decent returns if you invest in two diversified equity funds with good present and past performance record.Keep tracking the performance of funds after investment.

  69. Hi Hemant,

    Your articles are real eye opener but why don’t you suggest the actual names of Mutual Funds that are good and wherein one can invest. I had invested randomly specially in J M Mutual Fund and after 10 years my investment is almost half! Now I am waiting for the market to get better so that I can redeem from those funds. I would really appreciate if you could suggest some very good funds where I can invest. Thanks.

  70. Hi,
    Sir

    I would like to thanks to you as i have no idea about short term & long term investment but u have note here the same with very good practical Example .

    Thanks for knowlaging sharing & opening eyes for investor who wants to investment their money by systamatic way

    Regards ,

    Vaibhav Jadhav.

    • Hi Pratima,

      You have not mentioned your time horizon – for keeping myself safe I assume it to be 20 years. For this horizon one can confidently invest in diversified equity mutual funds. Now there are 2 ways of investing either as a lumpsum or systematically. If you already have tasted volatility of equity you can invest the full amount in 4-5 funds in one go. But if this is going to be your first interaction with equity you should invest through systematic transfer plan – investing whole amount in 6 to 12 months.

  72. Hi Hemant,
    You have written a very nice article. I follow what you have advised – go in for Mutual funds because the common investor does not have the time to research companies and invest in equities.
    However there are people like me who do not know which is the better fund to invest in – you need to be quite careful in selecting mutual funds given the fact that there is a plethora of funds available and not all of them are doing too well!!! Quite a bit of research is needed to decide on which fund to invest. Of course I do admit that it is much easier to study funds rather than companies.
    This was just an observation I made and not meant to discourage!! Hope all of us become wiser with the good advice that you have put up in your website. All the best. A big thank you from my side for all the help.

    • Hi Dr Biju,

      Thanks for your appreciation & also for opening eyes of other readers. on a lighter note are you a eye specialist 🙂

      You have rightly pointed the hard facts of life. Even I keep saying the same thing but in different manner.

      Keep visiting TFL & sharing it with you friends.

      • Hi Hemant,
        Dreadfully sorry that I did not see your comment. I just plain missed it. Incidentally I am not an Ophthalmologist (but my wife is one!). I am a Physician and Diabetologist.
        Hope to keep in touch with you from on.
        All the best

  73. Hi Hemant

    Very rightly said about the world’s most expensive hobby.
    Nice article, can you also share some information on Liquid MF plans.

    Regards

    • Thanks Prashant.

      Liquid funds are more suited for the investor with an investment horizon of about a month. In personal finance, ‘liquid’ means anything that is almost as good as cash. Money market funds or Liquid funds as they are commonly known as are one of the safest places to park your money for short periods of time. Typically, the funds invest into money market securities and debt securities that mature in 91 days.

      Most companies and HNI park their short term money into these funds as liquid funds are more tax efficient than the interest one can get from the savings accounts.

      Some of the benefits of parking money into liquid funds are, zero exit load on withdrawals, safety, low expense ratio and benefits of reinvesting the dividend.

  74. Hi Hemant ,

    Very good article , specially examples used of plane and cycle are bang on target ,
    my query is about FMP , as returns are not already disclosed then how should i know in advance how much will i get ( will looking performance of other similar funds from same fund house will help ? )
    Also do after tax returns of FMP beat the FD ?

    • Hi Rohan,

      It was a misconception among investors that Fixed Maturity Plan (FMP) means getting fixed return. But FMP is only about Fixed Maturity – that your investment has some maturity date. Earlier asset management companies used to declare indicative yields but even that were stopped by SEBI last year. It is really tough to predict what you are going to get but you can take some idea from other funds with same maturity. If you are planning to invest in 1 year FMP you can see yield to maturity of a short term fund with 1 year maturity – not necessary that it should be from same AMC. After tax return from FMP has very high probability of beating the after tax return of FD if you are in highest tax bracket.

  75. Dear Hemant,
    Is it worth investing through SIP in a good infrastructure fund(ICICI) for the next 5-7 years. This sector has been quite underperforming in the recent past and it has to go northwards over a period of time. Isn’t it the right time to accumulate ? Please comment

  76. Hi Hemant,

    Good article and ‘Investment Vehicle’ – a very good example to describe/explain on Long and Short term plan…

  77. Hi there,

    Namaste everybody.

    Would like to know if NRE funds invested in the equity and debt are repatriable?

    Thanking you in advance,

    Ravi

  78. I have 50 lacs spare my daily requirements are covered through other sources
    I am a senior citizen with no liabilities where i should invest in FDS/Mutual Funds

    • Hi Prem,

      Your investments depend on your investment horizon & goals rather than your age. And from your comment it looks you don’t need this money – so you should invest it according to the need of the beneficiary. So if horizon is long term go for Equity Mutual Funds.

  79. I had one small doubt.. Everyone says that investing in a PPF is very good for long term..I mean, investments get locked in over a period of time, tax free income on realisation, can make about 1 crore rupees with regular investments over 36 years, etc.. but isn’t that a debt instrument and defeats the purpose?..

    • Hi Sunny,

      Can you name 10 people(your friends, relatives or your colleagues) who have earned money from equities. So in every case debt should be part of once asset allocation & ppf is best instrument in that.

      You can download the e-book from home page to know the reason.

  82. Hi Hemant,

    I have 4 lac in cash and i want to invest in short term(6-12 mnths) financial products which gives decent returns.

    Tell me which will be app. product to invest in ?.

    I have shortlisted gold,fd,pomis,eq MF ..I am not sure about returns in FMP.

      • Dear Hemant,

        I started earning recently, and i dont have knowldege of stock market or market related investment tools (euity, mutual funds, SIP, STP), i want to know thoughly to invest for mid trerm and long terms needs, pls. please help me provide me a article so that i can understand easily.

        Thnaks and Regards
        Anil Kumar Madupu

      • Hi Ruplai,
        Thanks for appreciating our effort.
        Regarding IPOs – this is not the best way to invest in equities, you should invest in mutual funds through sip.

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