Is it possible for you to achieve financial freedom in your lifetime? If yes, then how much money from your income should you save every month?
What should be the ideal investment mix of debt, equity, mutual fund, real estate, gold to achieve financial freedom? Which loans should you avoid to reach your financial goals?
In a chat with readers on August 17, wealth management expert Sanjiv Mehta answered these and many more queries related to generating wealth and achieving financial freedom.
For those of you who missed the chat, here is the transcript.
Part II: Monthly saving = financial freedom
Monika asked, How much % of income should be saved monthly for the Financial freedom, Sir?
sanjiv mehta answers, power of passive income is phenomenal. Only 10% of your current income earning 9% annualised on an average can equal the active income earned.
rtp asked, hi, what's the future of our stock market.... when it will touch 16000 .... and what are the stocks that we can go with for finanial freedom.....
sanjiv mehta answers, indian economic fundamentals are very good and economic growth is expected to continue at a brisk rate for a number of years. timing of a certain level being reached nobody knows, however from a long term perspective, Indian equities should deliver good returns.
vinod asked, I am currently earning around Rs 20 K and aged 26. What options can i create for myself in order to achieve what is called "financial freedom"?
sanjiv mehta answers, hi vinod, save 10% at least every month and invest in a diversified portfolio - it is possible to earn 9-12% annualised on an average and you can easily achieve your financial goals.
Kris asked, can you recommend some good mutual funds to invest in at the moment?
sanjiv mehta answers, some good mutual funds currently are dsp ml tiger, dsp ml equity, fidelity equity, reliance vision and growth, franklin bluechip,hdfc equity.
amit asked, what should be ideal allocation of debt, equity, both regarding my savings? I am 30 yrs old and married but no kids.
sanjiv mehta answers, hi amit, any portfolio shud first be allocated to liquidity, then to safety and rest of the money shud be in yield enhancing asset classes. currently looking at economic stage and yr personal cycle stage, your yield enhancing part should be mainly in stocks and real estate.
Nanthan asked, Which is the best avenue to invest, Real estate or Mutual funds?
sanjiv mehta answers, any portfolio shud hv the objective of maximising returns at minimal risk. combining the two-real estate and equity (i assume that by mutual funds u r implying equity funds) provides diversification across asset classes and reduces risk. my answer will be a combination of two is the best.
mama asked, Dear Sir, what would you advice retail stock market investors like me in such choppy times? Do you think diversifying risk by investing in mutual funds, real estate, gold mutual funds and art helps one's portfolio in the long-term?
sanjiv mehta answers, yes as in the previous answer, diversification is one of the important factors in reducing risk. however each asset class has its own role - while stocks, debt and real estate r the integral parts, commodities and art are more of reserve players.
FIN asked, For Financial Freedom, should Loans be avoided?
sanjiv mehta answers, home loan is generally a good idea since it provides leverage and creates a very good asset in the long term. however loan for a depreciating asset like car should be very carefully thought through.
piya asked, I am 46 and having one crore and three dwelling units. In case I stop further earning do you think I can maintain a comfortable life or earn an NPV equivalent of Rs 50,000/month for the rest of my life?
sanjiv mehta answers, Rs 50000 per month is equiv. to rs 6 lakhs which is 6% of yr savings. one crore shud be able to generate more and that will enable to take care of future inflation so that u continue to generate Rs 50000 in real terms. u can further enhance yr monthly income by renting a couple of yr units.
raghvi asked, Hello Sir, seeing the current volatile markets what percentage of saving should go towards equity for long term financial gains?
sanjiv mehta answers, equity is a reflection of economic growth albeit in a volatile manner. since the indian economy is expected to continue to grow at a good pace, a significant proportion of long term saving can easily be allocated towards equity.
anand asked, i am 25 yrs old. i am saving Rs 5000 pm my salary is Rs 22000pm. Is this sufficient for me to live happy at the age of 40yrs?
sanjiv mehta answers, anand, important factor is how this u r channelising this saving. if u r not investing it well, then it will be insufficient.moreover, power of compounding intensifies with time and therefore 15 years time span seems less.
Part II: Monthly saving = financial freedom
Dr Sanjiv Mehta is the managing director of Finance Doctor (www.financedoctor.biz), and author of the recently published book, 'Winning The Wealth Game: Cricket Strategies For Financial Freedom'.