7th pay commission: Experts say it is better to look at short-term and long-term financial goals while dealing with arrears rather than splurging.
For central government employees, the 7th Pay Commission D-day is fast approaching with the higher salary and arrears likely to be credited to your accounts very soon. As FeMoney reported on Thursday, indications are that the government is working on August 1 as the possible date when central government employees’ bank accounts may reflect the higher salaries and some parts of the arrears
So, what do you do with the money? By all accounts, the arrears are likely to be substantial and there will be the urge to splurge. But if you are a person with responsibilities, you have to look at your short-term and long-term financial goals. For that, it would be advisable to deploy a major chunk of the money into productive avenues to generate wealth for the future.
Your investment moves would require proper assessment of the various avenues of investment and the knowing the preferred investment instruments that are likely to stand in good stead in the long run. Where and how should you deploy the money for the future? We spoke to a few leading investment advisors to bring you some moves that you can opt for.
Arvind A Rao, founder, Arvind Rao & Associates, advises a staggered approach. “From the arrears receivable, 60 per cent should be used to retire debts like personal loans or home loans. The balance 40 per cent should be set aside for short-term goals and hence be invested in debt instruments, like debt mutual funds or fixed deposits.,” Rao told FeMoney .
Rao advises that the recurring monthly surplus generated from investments should be utilised for increasing contributions to long-term goals and accordingly should be invested in equity sips. “Risk takers can consider investing in mid & small cap funds as well as sectoral funds from these additional savings,” he says.
Rishi Kohli, MD & CEO, ProAlpha Systematic Advisors, advises a mix of equity and debt investment. “One should look at investment options depending on their risk profile and time horizon. On a general basis, given salaried employees, one should look to invest in mix of equity and debt instruments such as balance funds, Monthly Income Plans (MIPs), Fixed Maturity Plans (FMPs), tax-free bonds and infrastructure bonds (as and when they are launched) and diversified equity mutual funds.”
Kohli says those who feel they are not financially adept at deciding their investment on their own should take the help of financial planners to chalk out an investment strategy for themselves.