In the last few days, a number of readers have written to FE Money, asking about how should they start their investment journey, which fund should they invest in or what should they do with the surplus money they have.

For instance, Gokul writes that he wants to make 80-90% of his investments in Small and Mid-cap funds for a very long term (25-35 years) to get the “best returns” in the equity market. He further says he is getting a lot of Nifty 250 Small Cap Index Funds but cannot find any BSE Sensex Small Cap 250 Index Funds. Gokul wants help in identifying BSE Sensex Small Cap 250 Index Funds and also suggestions for his long-term investment plan.

Mohnish Jagdale writes he has not invested in any mutual funds yet. He wants to know which is the best fund for long-term investment. Mohnish is aged 30, unmarried and earns Rs 50,000 per month. He also has a personal loan of Rs 1.5 lakh.

Ashfaque Mastan says he has Rs 35,000 surplus money to be invested. He wants advice on whether to invest in a Mutual Fund, Bank Nifty, Gold ETF or any other asset.

G Rakesh, an IT sector employee, writes that he is earning Rs 93,000 per month and he wants to know how to invest in Mutual Funds. Mayank Bhatnagar, Chief Operating Officer at FinEdge, has explained what should Rakesh do to start his investment journey in this article. Other readers can also benefit from the guidance provided by the expert.

Arun Kumar, VP and Head of Research at FundsIndia provides further guidance to readers who want to start their investment journey. Arun suggests a 3-bucket approach to automate and invest savings. Here’s what he says:

It’s a good practice to save at least 20-30% of your monthly income. You can follow the simple 3 Bucket approach to automate and invest your savings.

Bucket 1 – Safety Bucket

This bucket is for all your emergency requirements. Allocate 5% of your monthly salary to this bucket. Choose one good liquid fund for this bucket. Continue to add to this bucket till you have the amount equal to 6 months of your monthly spending. After this, shift this 5% savings to your long-term bucket.

Bucket 2 – Short term Bucket

This bucket is for your short-term goals (which are coming up in the next five years). Allocate 5% of your monthly salary (or more based on your short-term requirements) to this bucket. Use a Low Duration or Short Term Debt fund. If you are not comfortable with debt funds, you can invest this amount into an FD.

Also Read: My Provident Fund account has Rs 14 lakh. Should I withdraw it to pay home loan or increase SIP?

Bucket 3 – Long term Bucket

This bucket is for your long-term goals (which are more than 5 years away). Allocate the balance of your savings (in this case 10% of your monthly salary) to this bucket and start a SIP into good equity funds. If you prefer active funds then choose a few good diversified funds (3 to 5) and if you prefer passive funds then split it equally across Nifty 50 Index fund and Nifty Midcap 150 fund.

When you receive a lump sum amount via ESOPs, bonus etc., as a quick thumb rule put 40% of this into the long-term bucket, 10% into the short-term bucket, and 10% into the safety bucket and you are free to spend the remaining 40% of the amount received.

Readers should note that this platform is not intended to recommend any particular fund or any other asset for investment. This is the job of a professional financial advisor. Through this section, FE Money aims to provide only broad guidance to readers on financial planning, income tax, retirement etc. through inputs provided by personal finance experts.

Have any personal finance queries? Write to fe.money@financialexpress.com. We will get relevant queries answered by personal finance experts.

Disclaimer: Views and suggestions mentioned above are those of the respective experts/commentators. They do not reflect the views of financialexpress.com. Please consult your financial advisor before investing