Are you also a double income no kids (DINK) couple?

IIPM, GURGAON

Newly weds Anshul and Rachna Yadav have been married for a couple of months now. Settled in Bengalooru, Anshul is working as a Senior Software Engineer with Wyse Technologies. Rachna has been at home for a while, but plans to get back to work in the near future with a media house. The don’t plan to have children for at least the next four years. Their combined gross salary would soon become anywhere between Rs.11-12 lakhs per annum.

Anshul & Rachna

“Short term goals are good to plan and easy to achieve. It boosts the morale and provides tremendous confidence to decide the next bigger goal for the life,” enthuses Anshul. Full of life, he and his young wife have already stepped into a short term achievable goal (by saving and investing in tax saving funds) for the next five years. They want a ‘healthy financial status’, ‘happy family’ and ‘secured future life’. He believes that the achievements of the first five years will pave way for the next crucial five years of their life. “I belong to a service oriented family background and that might be a reason why I can’t think of my own company, but I am keen to support a business started by any mate with a vision.” Happy with his salary package, but raring to have more money to spend, he feels that there is good money to be made at the bourses in India. “In time, I’d like to go and settle abroad,” he says contentedly.

Start investing early as that is the ‘key to a happy life’, where your needs at every stage of life can be met. Market watchers aver that Anshul’s choice of funds and saving habits are commendable and planning for the first five years is also a good tactic, since he’s just married and can afford a moderate to high risk appetite. If in a similar category, one can look at further adding a mid and small cap oriented fund to their portfolio, to give the portfolio aggression.

However, analysts also warn against adding too many funds to a portfolio. A portfolio of 5-6 funds should be adequate. Further, through a Systematic Investment Plan (SIP), you can gradually build your position in these funds. A close eye needs to be kept on such a portfolio to ensure that no particular fund becomes too dominant. Additionally, investing in an Equity-Linked Saving Scheme (ELSS)even after exhausting the Rs.1 lakh exemption under Section 80C is a good idea. There are some ELSS funds that outperformed some of their other diversified equity counterparts. Having said that, the matter of a three-year lock-in still remains.

Here’s a look at the consistent performers in the diversified equity category. In the five-year return slot, Reliance Growth (No.1), Magnum Contra (No.2) & Magnum Global (No.3) have consistently held on to the top three rankings. The above table highlights the top performers in the tax planning category, which can be considered in order to gain the maximum from your Rs.1 lakh (tax saving) investment.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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