ot a question about your money? What you should or should not do with it?

Our expert Uma Shashikant has the answers.

I am 22 years and save Rs 20,000 per month. I want to be a cropepati within 10 years.

It may sound too ambitious but I have to fulfill my dream.

- Praveen Jain

To achieve your goal, you need to earn a compounded annual return of 30%.

To the best of my knowledge, there is no investment avenue that will give you this level of return in 10 years. Either bring up your savings, bring down your target or increase the time frame to achieve your goal.

• How to save

I am 23 with an annual salary of Rs 550,000.

I may be getting married in a year's time and will have to take care of everything. What's the best investment strategy?

- Amit Agrawal

Since you have only 12 months to go, it is tough to take an equity call. If the stock markets turn down when you need the money, you face the real risk of capital erosion. 

Simply keep the money in a long term floating rate fund for a year. Floating rate mutual funds have around 65% to 100% of their investments in floating rate securities. The balance is in fixed income securities. Floating rate instruments have a variable interest rate (just like you have a floating rate on a home loan). The interest rate changes periodically and is linked to a specified benchmark.

Alternatively, you could look at a 1-year or 13-month fixed maturity plan which is tax advantaged. These are mutual fund schemes that invest in fixed return instruments like bonds for a fixed period of time and return the money on maturity. To get some more information, read What to do with your money.

In your own interest, though, given your age, you must have a long-term investment as well.

Perhaps 10% of your savings, invested in equity through a mutual fund, can act as a long-term accumulation. You must not touch this even in dire times.

You are also likely to need money to set up home. It is a good idea to work out a plan after consulting your wife. If you lock your money in long-term investments, and find you need to fund your honeymoon, home-making, vehicle and the long list that stare a young man at his face, you could be in trouble. 

Begin by estimating and, perhaps, controlling your spend. Investments can come next.

• PPF may be taxed on withdrawal

I am 25 years old with a monthly income of Rs 13,000.

My premium on my insurance policy is Rs 5,000 every quarter.

I am getting married next month, for which I have taken a personal loan of Rs 75,000. The Equated Monthly Installment is Rs 2,750 for three years. How do I save?

Illustration: Dominic Xavier

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