Personal Finance Tips for fresher

Congratulations - you're off to a great start! Thats a tidy income to start off with.

My advise, cut out all the noise and random friendly advise from all and sundry and keep it really really simple till you hit a 50L investment corpus.

0. Buy a Term Insurance (vanilla, no riders) for 2 Cr. Annual Premium. Till 65 years of age.
1. Buy a Health Insurance cover for 10L. Annual Premium.
2. If your parents aren't insured, buy a family floater cover for them now. 15L. Annual Premium. This may become impossible as they age.
3. Start a monthly SIP in a single Nifty50 Index Fund (UTI : HDFC / ICICI / Nippon / doesn't matter). From your data I'd say put in ~40K per month.
4. Start a PPF account and maximise annual investment - 1.5L pa.
5. Invest all bonuses / increase in salary in the same Index Fund.

Watch the magic of compounding begin. You'll see the impact of laying this foundation only post 20 yrs.

If your salary (and as a result your SIP) doesn't change, you should hit 50L in ~7 years. Faster if you get good salary hikes and appraisals.

When you hit 50L, diversify into other asset classes (SGB + Flexicap MF + Real Estate for own use). Do not create clutter by adding MFs and complicate life. Keep investments simple as you scale:

30% - Index Fund 30% - Flexicap 20% - Gold (demat) 20% - Debt (EPF/PPF)

Rebalance asset allocation annually.

Never invest or choose instruments for tax planning. Tax optimisation leads to suboptimal instrument choices with your money (Insurance / Debt / etc).

Suggested Reading: Let's Talk Money, Monika Halan. Easiest book to understand and follow.

Good luck!

Congrats on a terrific start. Here's what I'd recommend.

1. Taxes - at your income level, you need about 30% deductions to be in the old tax regime. If you can cobble those deductions together, great. If not, it's the new regime for you.

2. Deductions can be a mix of some of these: PF contributions, rent (HRA), tax-saving mutual funds, health insurance, term insurance, and NPS. Generic advice: I wouldn't bother with any other tax-savers. I find that a combination of term insurance, health insurance, tax-saver MFs are typically the best. Swap MF for PF if you're risk averse (though you shouldn't be for your age).

3. Before you invest, set some goals, i.e., you need ₹X in Y years and you can set aside ₹Z per month to get the goal. Goal-setting helps identify the right MF category.

4. Health insurance is critical. Get it done even if your employer provides coverage.

Have some amount in FD - enough to last you a year for unforeseen circumstances, or financial obligations if you have any. Apart from that, put everything into mutual funds and forget for 3 years.

I recently paid the downpayment for a house, and it pinched to break the FDs. The interest i earned there got taxed 30% as income. If it was a mutual fund, i would have paid nothing because I reinvested it into another asset class.

Also, save aggressively. There's an amount of money needed for "fun" and "experiences" - varies from person to person. But don't do lavish spending at this point. Start planning for big things right from this point - house, marriage, financial independence, business.

Read about the stock market investing from Varsity App (Free) by Zerodha

https://play.google.com/store/apps/details?id=com.zerodha.varsity

Calculate your monthly expense and FD that expense * 6. So that you have 6month bandwidth atleast if you are unemployed. Post that start sip in index fund. Nifty50 and nifty next 50. Keep adding sips as when ur salary increases but dont over diversify.