In the words of Warren Buffett, “Do not save what is left after spending, but spend what is left after saving.” You are emulating this mindset and it will serve you well, considering how you’re planning to save a significant part of your earnings.
For a 25-year-old earning an impressive 4.5 lac/month and intending to invest 75% of it, you are already on the right path. At this age, you have the advantage of time and the power of compounding on your side.
Considering you’re an NRI, Indian equities can be a great place to start – either via a PMS or direct equity; mutual funds have some taxation related issues and may not be as convenient. Direct equities provide diversification, are easy to handle, and there are plenty of options to choose from based on your risk tolerance.
Yes, the real wealth multiplier, particularly over a long-term horizon, is equities. When it comes to picking the right stocks, I use the Roots and Wings approach. “Roots” refers to companies with strong fundamentals – low debt, high return on equity, and stellar management. “Wings” signifies businesses that demonstrate consistent growth in revenue and profits and are leading their respective markets.
Given your young age and substantial savings, you can afford to take on a little more risk for potentially higher returns. So allocating a larger proportion of your portfolio to equities is something you might want to consider.
Don’t forget to keep some liquidity for emergencies and opportunities that might come up. You could consider parking this in liquid or ultra-short-term liquid/ultrashortterm mutual funds.
Investing isn’t a sprint, it’s a marathon. To navigate the financial landscape, consider seeking advice from a trusted investment advisor like us at Jama Wealth. We offer expert advisory and tailored Portfolio Management Services (PMS) to our clients.
