Investing 60k/mo for long term and tax savings

[petercm]

Hello Indian Investors, I am a fresh college grad just started out in the industry.

I would place my position as similar to this guy except with 0 earning/saving/investing experience(yet to receive my first paycheck) and very uncertain future plans.

Current financials : 1L/mo post tax income(w/o PF deductions), ~17k rent(wanted a place close to work)

I believe I should easily be able to save 60k a month, even 70k comfortably.

Life goals : Totally uncertain at this point. I might stay at my current job, or after 1-2 years go for a masters in India(for which I hope to not require any saved money and function out of provided stipend) or abroad(which I estimate to cost ~40L). If I go for an MBA however which is also an option, it would definitely be in India and cost a significant amount.

Liquidity needs : 0 family obligations and employer provided health insurance with 10% copay. So not a lot for emergencies. This is my estimate of my worst case emergency needs :

20k immediate

50k in 24 hours

1L in a week

So I can function with 20k in the bank and the ability to withdraw 50k in 24h and 1L in a week(all cumulative).

Tuition fees as liquidity needs, if I do choose to go that route, would be planned months in advance.

Given all that background and the fact that I have no immediate need for money, I want an investment avenue that has low risk over a long time horizon(say 10 years). Can you advise me on this, and also about taxation contingencies for if my plans change(say education, etc.)

Thanks a lot!

 

[tita_tey]

@petercm My advice would be the same as the one to the post you've linked.
60k is month is a great start and most of the basics (in the link you'll given) remain the same - term insurance / emergency fund / equity MFs. This should form the bedrock of your strategy. The basics of investing are actually pretty straight forward.

If risk isn't something you're willing to take, reduce your equity percentage. Invest half in equity MFs and spread the remaining half over a mix of debt, ELSS and liquid funds.
Just a point on your education plans, do evaluate whether you'd want to use your investments or take a loan. Education loans typically have a lower interest rate than your investments (assuming equity MFs) and give you tax deduction over and above 80C.

 

[andryvok]

@petercm carry on that this rate and you will be able to retire by 40

 

[petercm]

@andryvok Highly iffy whether I will! As is apparent from my username, I am not currently too enamoured with the idea of being a salaried employee of a corporation for much longer

 

[kail]

@petercm I am this guy. Put all of it in MFs. Worked decently for me till now.

Also if your firm provides Stocks(RSUs) , do a little research about the future of your company and then sell/hold 'em accordingly. I bring up this point cause most ppl I have seen don't pay much heed to this.

All the best.

 

[petercm]

@kail

do a little research about the future of your company and then sell/hold 'em accordingly.

At what point does it become insider trading? This is the reason we have trading windows I guess. And if not allowed to act on the info we have as employees of the company, our employer shares are no different from that of any other company. So is it not then most prudent to sell off all shares that are vested immediately and hand over the money to a fund manager who can analyse publicly available info for us?

 

[truefreedom1977]

@petercm What do you guys do that gives you 1L straight out of college. A jealous friend of mine wants to know.

 

[petercm]

@truefreedom1977 Software Development at foreign MNC. They all pay in the 14-16 range for freshers. I also know a 2-hop friend making ~60-70LPA in India, as a fresher, at Tower Research.

 

[jesusisking77]

@petercm

~60-70LPA in India, as a fresher

awesome

is this fresher with 0 prior work experience ?

 

[petercm]

@jesusisking77 Well I think that is what a 'fresher' means in the industry

Update : He is earning 60. Got confirmation from the mutual friend.