I would like to create a corpus of Rs 1-1.5 lakh to meet emergency expenses. Where should I park my money to get the best return with a facility to withdraw money without paying any charges whenever required? Is NPS-Tier-II the best option or should I continue to keep money in my ICICI salary account? Adil Shetty, CEO of Bank Bazaar, responds: "The best way to build an emergency fund would be by making a recurring deposit with a scheduled commercial bank. A recurring deposit leads to discipline in your investment and gives you a clear timeline of how it will take a long time to build your financial funds. Simply leaving the money in savings account for other purposes. Since you are investing your own emergency corpus, the most important factors are capital security and liquidity. In this case, a fixed deposit is a best and safest option that gives you capital protection as well as liquidity. You can break FDs and access funds in a matter of hours should you need it. Many banks no longer charge a penalty for breaking FDs, which are the most viable alternative for short-term investments. Banks also have auto-sweep accounts where the money above a certain threshold is automatically converted to an FD that can be broken on demand. However, there may be a complaint of terms and conditions you need to clearly understand the work of these accounts before investing. Stay away from financial institutions that have a high NPAs OR those that have been in the news for governance issues no matter the returns offered."
Right now, I am investing Rs 10,500 every month through SIPs. I invest Rs 2,000 in Axis Midcap, Rs 3,000 in Axis Smallcap, Rs 1,000 in Invesco India Contra, Rs 2,000 in PP Flexicap, Rs 1,000 in Mirae Asset ELSS, Rs 1,000 in HDFC Sensex, and Rs 500 in Motilal Oswal Nasdaq. My investment horizon is 15 years Is this okay? As a government employee, can you swing trading or is it prohibited? Vidya Bala, co-founder PrimeInvestor.in replies: "Your choice of funds is good. But you have close to 50% in mid and small caps. Also, funds like the Nasdaq 100 are aggressive too. In a deep correction, it could really affect your portfolio. " Try to mid and small-cap exposure to 25-30%. Also, add 20-30% debt and gold to diversify your asset allocation. On trading, it is best to check with your office to know about such restrictions or related compliances"
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