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Invest after working out financial situation – Mint

I got a job last year, and my annual income is about 4 lakh. Where can I start investing so that I get a good return with less risk? Please advise.

—Ranjay Shankar

Before you decide where to invest, or even start investing, you need to work out your personal financial situation. Determine how much you can afford to save and invest on a monthly basis. Also, ensure that you have sufficient protection in the form of insurance policies (term life and health) and an emergency fund (worth 4-6 months of your salary) in place.

Once you have secured these, if you are saving for the very long term, you can start investing in an equity index fund and a small and mid-cap fund and keep it going (with periodic increases). If you are investing for a shorter duration (3-5 years), you would need to be more cautious and go with a small allocation to an equity index fund and the rest to a debt fund or a recurring deposit.

Srikanth Meenakshi is co-founder, Primeinvestor.

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