Long Term and Short Term Investments

Most of the time when we are discussing with clients, their first question is ” Where should I invest my money to get the best return”. If you are a regular reader of our articles, then even you will be able to answer this question that Returns are not the goals in Investment. But this time around, we will explain a bit how to invest for short term goals and how to invest for long term goals.

What is Long term & Short term

Before, we start on this topic, let us explain what short term is and what long term is. Because many investors don’t really understand this concept and to many, even 1 years seems to be long term! Short term investment is anywhere 1 year to 3 year. Period less then 1 year would come under Ultra Short Term. Investment horizon of more than 5 years should ideally fall under Long Term investments. Now a period between 3 to 5 years is combination of long term and short term and we would classify as Medium Term Investments.

We will try to understand it by analogy

Just imagine a situation where you have to go to nearby grocery shop. Would you take Airplane for this purpose. Sound funny! Let us change the example, you have to go to Canada for a vacation. Would you go walking or take cycle for this purpose. Sound irritating!

Investment Vehicle

What we want to convey is that you should choose your INVESTMENT VEHICLE depending on how far you have to reach. We use high speed vehicle only when our target is far away; similarly high return investment like equity should be used only for long term goals. On the contrary, for short distance, we use vehicle with slow speed and same thing applies in investment. For short term goals, we need to use low vehicle like Debt.

Ownership VS lending in investments

When we plan for long term investment, the speed on the return on investment should be high. Not just because you have to make more money but you have to beat inflation in long run. You have to make sure that the returns on investments are greater than the rate of inflation. This can happen only when you invest your money in Ownership Assets. Ownership assets have short term fluctuations but in long haul, they beat inflation and create wealth. Long term Financial investment which beat inflation is Equity and it is equity which creates wealth in long term. When we talk of equity, we would like to clarify that we don’t advocate people to invest in equity directly unless they have in depth knowledge of markets. For people who are not specialist, it is better we leave to professionals and invest in Equity Mutual Funds.

Also Read

KISS strategy in Financial Products: Keep it Simple Stupid

“Timing” or “Time in” Equity Markets

When we want to plan for short term investment, the need is to preserve the wealth and not to create the wealth . Do understand the difference between income and wealth. Since the tenure is short, one cannot take any risk of fluctuation and hence we should be in lending assets. Lending assets in financial term is called Debt. Debt is an instrument where get returns in the  form of interest.  Typically, people relate the word interest with FDs, Post Office schemes etc. but there is much larger universe of debt. In fact, from the point of view of Income Tax, it is better that returns are taken in the form of dividend and capital gains rather than simple interest. The option available in Debt instruments are huge but typically investor has limited knowledge of it. Debt instruments are FDs, Bonds, debt based Mutual Fund Scheme such as Short Term Funds, Gilt Funds, Liquid Funds, floater etc. Depending upon the liquidity needs and taxation, the product should be taken debt category. Read FD VS FMP

As legendary investor Warren Buffett quoted “Investor has to do very little things right as long as he avoid Big Mistakes.”

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 the opposite, Equity for short term and debt for long.

Guess which is the world’s most expensive hobby…… “Equity Trading”

Think of your own portfolio and analyze.

Love to hear your comments.

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{ 129 comments… add one }
  • Ashwani June 8, 2010, 8:50 AM

    It is really an eye opening article everybody should feel the difference and think about the investments

    • TFL June 8, 2010, 11:01 AM

      @ Ashwani

      If you like it share it with your friends “Gyan bantane se badhta hai”

      • Anil Kumar Madupu January 9, 2013, 5:24 PM

        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

    • Rupali Jaiswal February 6, 2012, 10:06 PM

      sir it is fabulous,,nd great knowledge ,,u r spreading!!thank u..kindly also mail us how to enter in ipo

      • Hemant Beniwal February 7, 2012, 7:32 AM

        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.

  • Gaurav Sharma June 14, 2010, 9:35 AM

    Good to see your regular mails on invester education and right product pitching.

    • TFL June 14, 2010, 7:31 PM

      @ Gaurav

      Hope its’ useful.

  • Baranidharan October 27, 2010, 8:21 AM

    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.

  • hemantbeniwal October 27, 2010, 8:34 AM

    Hi Baranidharan,

    As your horizon is short term – your focus should be on safety of money rather than growth. So Gold & Equity MF can’t be your choice. Post Office MIS doesn’t make any logic due to it’s time horizon.

    Selection between FD & FMP will depend on your tax slab:

  • Rohit Bhagava December 29, 2010, 8:09 AM

    Good sip for short term investment

    • Hemant Beniwal January 8, 2011, 9:07 AM

      Hi Rohit

      I am not able to understand your horizon but if it’s less than 1 year – go for Liquid Funds.

  • Sunnydoc January 7, 2011, 5:36 PM

    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?..

    • Hemant Beniwal January 8, 2011, 8:48 AM

      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.

  • Prem Jagasia April 22, 2011, 10:56 AM

    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

    • Hemant Beniwal April 22, 2011, 10:34 PM

      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.

  • Ravindran May 1, 2011, 2:15 PM

    Hi there,

    Namaste everybody.

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

    Thanking you in advance,


  • Mani May 1, 2011, 6:34 PM

    Hi Hemant,

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

  • Jayakumar May 1, 2011, 9:13 PM

    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

    • Hemant Beniwal June 25, 2011, 4:24 PM

      Hi Jayakumar,
      It’s a great time to accumulate but my suggestio n is go for diversified equity funds.

  • rohan doshi May 2, 2011, 12:33 PM

    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 ?

    • Hemant Beniwal May 5, 2011, 10:12 AM

      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.

  • Prashant Paul May 2, 2011, 1:14 PM

    Hi Hemant

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


    • Hemant Beniwal May 5, 2011, 10:15 AM

      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.

  • Dr. Biju Paul May 2, 2011, 5:22 PM

    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.

    • Hemant Beniwal May 5, 2011, 9:50 AM

      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.

      • Dr.Biju Paul October 13, 2011, 7:44 PM

        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

  • Pratima May 2, 2011, 5:51 PM

    Hi Hemant,

    I have 3 lacs, want to invest for good returns in long term, please suggest some good options.

    • Hemant Beniwal May 5, 2011, 9:46 AM

      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.

  • vaibhav May 9, 2011, 4:17 PM


    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.

  • Ruby Patell June 26, 2011, 2:50 PM

    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.

  • Vishal Tope July 18, 2011, 9:24 PM

    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

    Vishal Tope

    • ANIL KUMAR KAPILA July 19, 2011, 9:34 AM

      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.

  • ANIL KUMAR KAPILA July 19, 2011, 9:38 AM

    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.

  • Prasad July 25, 2011, 12:33 PM

    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

    • ANIL KUMAR KAPILA July 25, 2011, 2:48 PM

      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.

  • Jeevan August 16, 2011, 2:41 PM

    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


    • ANIL KUMAR KAPILA August 17, 2011, 1:19 PM

      Hi Jeevan
      All the funds selected by you have a good long term past record.Only the performance of RELIANCE GROWTH has not been good for the last one year.Hence you can consider investing in the other three funds.

      • Jeevan August 17, 2011, 2:23 PM

        Thank you Anil.

        • ANIL KUMAR KAPILA August 17, 2011, 7:43 PM

          You are welcome Jeevan.

  • Mohan August 29, 2011, 5:15 PM

    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)

    • ANIL KUMAR KAPILA August 29, 2011, 5:54 PM

      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.

  • Kishore September 12, 2011, 11:02 AM

    Good Article…

  • Vishnu Bhat. September 18, 2011, 11:28 AM

    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.

    • ANIL KUMAR KAPILA September 18, 2011, 11:46 AM

      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.

  • Pekyi October 9, 2011, 11:37 AM

    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 ?


    • tinks November 12, 2011, 4:54 PM

      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.

  • abbu October 10, 2011, 5:29 PM

    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.

  • rahul sharma November 13, 2011, 4:28 PM

    knowldge resource

  • Prashant November 20, 2011, 1:20 AM

    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. 🙂


    • ANIL KUMAR KAPILA November 20, 2011, 12:44 PM

      Hi Prashant
      Please read the post – Best Mutual Fund For SIP.

  • rajesh December 4, 2011, 10:08 PM

    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.

  • prashant December 6, 2011, 12:41 AM

    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.


  • Sachin Shivgan December 11, 2011, 11:21 AM

    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?

    • Hemant Beniwal February 7, 2012, 8:14 AM

      Hi Sachin,
      Will suggest you to keep your expectation around 12-13%

  • sanjay verma January 1, 2012, 8:29 PM

    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 .

    • Hemant Beniwal February 7, 2012, 8:17 AM

      Hi Sanjay,
      As such there are no best funds but he can start sip in HDFC Prudence Fund.

  • B. K. SINGH January 25, 2012, 9:56 PM

    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.

  • M. A. Bari January 26, 2012, 1:56 AM

    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.

    • Hemant Beniwal February 7, 2012, 8:01 AM

      Hi MA Bari,
      Financial Life is like Rubik’s cube – you will try to work on one part & will miss other five. I will suggest you to have a proper retirement plan through some individual Certified Financial Planner at your location – this will make sure that you will have comfortable retirement life.
      I will suggest you to go through these retirement planning videos.

      • M. A. Bari February 12, 2012, 10:38 AM

        Hi Hemant
        Thank you for your advise. Regards

  • mudasir January 29, 2012, 12:40 PM

    plz suggest me the portfolio as i have a savings of 15000 per month. what are the better options for investment.

    • Hemant Beniwal February 7, 2012, 7:43 AM

      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.

  • s r shiju February 10, 2012, 7:28 AM

    where to invest in mutual fund for up to 3 years sip plan

    • Hemant Beniwal February 10, 2012, 12:58 PM

      Hi Shiju,
      Your horizon is ver short – you should stick to debt instruments.

  • s r shiju February 10, 2012, 7:29 AM

    which company will give best returns

    • Hemant Beniwal February 10, 2012, 12:53 PM

      Hi Shiju,
      You should learn more about investments – join TFL free financial literacy course.

  • Tarun February 13, 2012, 9:27 AM

    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

  • anup kumar sharma February 27, 2012, 8:40 PM

    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.

  • Nargiz March 26, 2012, 4:32 PM

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

  • ajit March 29, 2012, 12:42 AM

    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 ?

  • AMAR April 2, 2012, 1:25 AM


    • Hemant Beniwal April 2, 2012, 9:14 AM

      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.

  • aman kapoor April 2, 2012, 2:30 PM

    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?

  • Sudhir Goyal April 2, 2012, 6:35 PM

    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.

  • Abhishek April 29, 2012, 8:14 PM

    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.

  • jatin May 7, 2012, 11:10 PM

    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?

  • mohit jaiswal May 14, 2012, 2:30 PM

    hello sir,
    Iwant to invest some money by SIP mode,please guide me where should i invest.

  • Dr. B. N. Vasudeva Naik May 30, 2012, 10:27 AM

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

  • Dr. B. N. Vasudeva Naik May 30, 2012, 10:33 AM

    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

  • Rajesh Kumar Tarika June 3, 2012, 2:11 PM

    Nice attempt to make people aware how to plan better one’s investment!!!

  • sanjay June 7, 2012, 1:33 PM

    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

    • Hemant Beniwal June 10, 2012, 6:37 PM

      Hi Sanjay,
      You can stop fidelity sip & start in some other fund house.

  • Leena jethwani June 10, 2012, 12:35 AM


    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?

    • Hemant Beniwal June 10, 2012, 6:21 PM

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

  • C C Kapil July 2, 2012, 9:04 AM

    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 ?


  • SUDESH KR SHARMA July 16, 2012, 12:32 AM

    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.

  • SUDESH KR SHARMA July 16, 2012, 12:55 AM

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

  • Poludasu Ravi July 16, 2012, 1:32 PM

    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

  • sanjay verma July 17, 2012, 8:11 AM

    Hi Hemant,

  • sanjay verma July 17, 2012, 8:38 AM

    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.

  • Dr Asit kr Mandal July 22, 2012, 8:15 AM

    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.

  • Shyam July 25, 2012, 4:09 PM

    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?

  • G SHANMUGAM August 6, 2012, 9:11 PM

    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.


    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.

  • anurag singh September 2, 2012, 7:01 PM

    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.


  • satya prakash maurya September 2, 2012, 7:29 PM

    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..

  • amit September 3, 2012, 9:43 AM

    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
    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.

  • Ruby Patell September 9, 2012, 7:03 PM

    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.

  • Devendra singh September 19, 2012, 5:39 PM

    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.


  • Mukul September 30, 2012, 12:59 PM

    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.

  • alok g October 31, 2012, 2:07 PM

    I have purchased SBI infra as NFO of 10k . now its having only 7/8 k, shld I keep the same or withdraw.

  • Anurag Kumar November 4, 2012, 8:22 AM

    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?

  • popo November 4, 2012, 3:57 PM

    Here in this forum, i feels like im in one of the most reputed B-school.

    thank you Sir.

  • naseem uddin November 4, 2012, 8:23 PM

    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.

  • anshu rastogi November 5, 2012, 10:34 AM

    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.


  • anil November 28, 2012, 12:54 PM

    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.

  • Saurabh Singh January 28, 2013, 3:39 AM

    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..

  • Sanjay Prajapati April 29, 2013, 10:28 AM

    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.

  • dattatray December 16, 2013, 10:48 AM

    thanks for nice article

  • Jasbir Chugh December 14, 2014, 8:26 AM

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

  • Shrinevas September 27, 2015, 6:10 AM

    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

  • Shishir December 20, 2015, 11:24 AM

    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

  • Karan Dhabalia July 4, 2016, 3:04 PM

    Awesome article sir. Fabulous, and great knowledge sharing.
    Thank you & keep it up

  • Rahul Gomes July 30, 2017, 1:35 PM

    Superb guide for new investors !,,,👍👍👍

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