The Best Investment Plan – Which One Do You Choose?

There is no one-size-fits-all solution.

And that’s true, especially when it comes to investments.

Your goals, existing investments, job stability, financial dependents, all play a vital role in determining the best investment plan for you.

In this guide, I will present an investment plan for each of your life stages.

Recommendation: To comprehend the investment plans for each life stage, please read about asset classes and asset allocation.

The Best Investment Plan – By Life Stage

#1: Student

“I have saved up Rs 15,000. Currently, in my second year of college. Is it too early for me to start investing?”

I was surprised.

A 19-year-old engineering student wrote to me.

Not many students think about saving money. But if you do, you are on the right path.

It’s never too early to save and invest.

Recommended Savings Plan

Allocation	Asset Class	Investment Product
75%	Equity	100% in Nifty 50 Index Fund
25%	Cash	100% in Bank Savings Account

Pro Tip: You can invest 100% in equities since you are young. However, you need a buffer for unplanned expenses. The 25% cash in your bank account will help you manage without depending on your parents.

#2: Just Graduated – First Job – Early 20s

I still remember my first salary.

It was less than 50% of the money I used to make as a consultant. But it was special.

And soon after, I received my second, third, and other subsequent salaries. But I never saved enough.

After all, how does saving Rs 5,000 monthly matter?

I didn’t know the power of compounding back then.

If I had saved Rs 5,000, every month, for the last 10 years in equity, I would have more than 10 lakhs. And that’s assuming a moderate return of 10%.

Not chump change, right?

Here’s the recommended investment plan for your single life:

First, max out EPF + PPF (1.5 Lakhs). Of the remaining, invest as follows:

Allocation	Asset Class	Investment Product
75%	Equity	75% in NIFTY 50; 25% in NIFTY NEXT 50
15%	Fixed Income	100% in a GILT Fund
10%	Cash	100% in a liquid fund

#3: Single – Late 20s

When you enter your mid and late twenties, your priorities start changing.

Your salary increases, marriage is on the horizon, or you might want to go for higher studies.

Here’s the recommended investment plan for your late 20s.

Max out your provident fund – EPF and PPF (1.5 Lakhs total). Of the remaining amount, invest as follows:

Allocation	Asset Class	Investment Product
25%	Equity	100% in NIFTY 50
50%	Fixed Income	50% in GILT Fund; 50% Bank FD/RD
25%	Cash	10% in Bank Savings Account; 90% in a Liquid Fund

Are you surprised to see lower equity allocation?

In your mid-20s, you have a lot of upcoming expenses that are less than five years away. And equity is generally not recommended for the short-term.

#4: Married Without Kids

Your whole life changes when you get married. No matter how much you prepare, you can never fully comprehend the scale of change.

Tip: If your spouse works, plan investment as a family. While both partners can manage separate investment accounts, the asset allocation should be mapped across all your accounts.

Here’re the investment options for married couples without kids.

As always, max out your EPF and PPF up to the max limit of Rs 1.5 Lakhs.

Of the remaining investment amount, invest as follows:

Allocation	Asset Class	Investment Product
75%	Equity	60% in NIFTY 50; 30% in NIFTY NEXT 50; 10% in a fund with international stocks.
15%	Fixed Income	50% in GILT Fund; 50% Bank FD/RD
10%	Cash	10% in Bank Savings Account; 90% in Liquid Fund

#5: Married With Dependent Kids

Your life undergoes a drastic change once again when you have kids.

Here’s an investment plan if you are married and have dependent kids.

Max out your EPF + PPF (Max Rs 1.5 Lakhs). Consider adding NPS to your mix. This is earmarked for your retirement.

Of the remaining investment amount, invest as follows:

Allocation	Asset Class	Investment Product
60%	Equity	60% in NIFTY 50; 30% in NIFTY NEXT 50; 10% in an international fund.
20%	Fixed Income	50% Bank FDs/RDs, 50% in GILT funds
10%	Cash	10% in your Bank SB account; 90% in one or two Liquid Funds
10%	Mixed	Investment for your kids. 50% in products like sukanya samriddhi yojana; 50% NIFTY 50 Fund.

Note: You can open a mutual fund account for your child. You will be the guardian and can operate and invest on behalf of your child.

#6: Married With Kids Who Do Not Need Support

Once your kids are financially settled, you can start focusing 100% on your financial life.

Now is the time to accelerate and save for your retirement.

The recommended plan for you is as follows:

Max out the limit for EPF, PPF, and NPS combined. The remaining amount, invest as follows:

Allocation	Asset Class	Investment Product
60%	Equity	75% in NIFTY 50; 15% in NIFTY NEXT 50; 10% in an international fund.
30%	Fixed Income	50% Bank FDs/RDs; 50% in GILT funds
10%	Cash	10% in your Bank SB account; 90% in one or two Liquid Funds

Note: As you near retirement, reduce your equity exposure. However, zero equity exposure is not recommended.

#7: Retirement – 50 to 75-Year-Old

Ah, the golden time.

You worked hard over the past several decades. Now it’s time for you to rest and lead a peaceful life.

If you have a defined pension, consider yourself lucky. You will get inflation-adjusted pensions throughout your life.

However, if you are like the millions of Indians who will not receive pensions, your investments will need to work extra hard.

Here is the recommended investment plan for you during your retirement phase.

Allocation	Asset Class	Investment Product
30%	Equity	90% in NIFTY 50; 10% in an international fund.
60%	Fixed Income	50% Bank FDs/RDs, 50% in GILT funds
10%	Cash	10% in your SB account; 90% in one or two Liquid Funds

Note: You need to draw down money for your living expenses. Move the required amount from Fixed Income to Liquid every three months. Move from liquid to bank account as needed. You can also set up an STP (Systematic Transfer Plan).

#8: End of Life – 75 Years +

“In this world, nothing can be said to be certain except death and taxes”

Benjamin Franklin

As we enter the final phase of our lives, we need to be mentally and physically prepared.

Here’s a recommended plan for when you enter your late 70s.

Allocation	Asset Class	Investment Product
20%	Equity	90% in NIFTY 50; 10% in an international fund
70%	Fixed Income	50% Bank FDs, 50% in GILT funds
10%	Cash	50% in your Bank SB account; 50% in 1 or 2 Liquid Funds

Note: If you haven’t already thought about inheritance, now would be an excellent time to plan your wealth distribution. Consider setting aside a portion of your wealth to the less fortunate.

Why Picking The Best Investment Plans With High Returns Often Fails?

Why do financial scams happen?

One word – Greed.

Often, people chase high return investments. Most of the time, they fail.

High returns come with high risk. And most people are not capable of correctly estimating or mitigating risk.

Here’s how much returns you can expect from your various investments:

Asset Class	Expected Return
Equity	10-12%
Fixed Income	Inflation + 2%
Cash	Negative Inflation Rate
Cash Equivalents (Liquid Funds & Ultra-Short Term Funds)	Inflation + 1%

Note: The above chart can serve as a guide to use for planning. However, depending upon market conditions, the numbers can vary a lot. E.g., equity returns might have been 18% until last year. However, the year you want to withdraw, it can crash to -10%.

Customizing Your Investment Plan

The investment plans listed out here are static. Meaning, if you are married with kids, the recommended equity investment is 60%.

But that doesn’t mean that you invest the same percentage when you are 30 as well as 60 years.

You need to adjust your asset allocation based on your age.

FAQ

A word of caution: The investment plans are meant for informational purposes. Hire a financial planner to create a customized investment plan for you.