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How should I allocate my money to meet retirement goals?


I am 30 years old and unmarried, and recently joined a global FMCG company. While I am earning in Euros, I want to invest in India with the objective of buying a house in Delhi/Gurgaon by the age of 40, and reside here after retirement. Over the last year, I have been investing in Indian mutual funds (MFs)—60% of portfolio—with only 4% return, and NRE fixed deposits —40% of portfolio —with 6.5% return per annum. I also have some passive investments in France (part of compensation) but I can’t access that for the next five years over tax issues. How should I optimise my portfolio? My risk appetite is medium to high . How can I can leverage the EUR/INR interaction as well as the difference between the two stock markets?

Name withheld on request

You are in a very good position financially at a really early stage of your life. You would need to think about the split between investing in your local market versus the Indian market and the splits in each of these markets. At the outset, you should decide to be deliberate about these allocations, and maintain them over the course of upcoming years.

In general, you can assume a steady currency depreciation of INR vis a vis Euro as is natural for a growth currency to do. That means your investments in the Indian debt market or deposits) needs to be kept lower than in growth assets such as equities. The European market’s advantages are general stability and relative strength of its currency. However, Indian markets have the potential for higher returns, even though some of that return would be eroded by currency depreciation.

Separately, just because your financial goals are India-centric, does not necessarily mean that you need to invest in India. You can send yourself money at appropriate times to take care of needs such as home or other purchases.

You can consider dividing your investments 50% each between Indian and overseas investments. You can take the help of an advisor on your portfolios either in India or in France, or in both markets.

Srikanth Meenakshi is a co-founder at PrimeInvestor.

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