How Much to Invest in Stocks & PPF?

How Much Money to Invest in Stocks & PPF?

Hoe much money one should invest in Equity & in PPF (Public Provident Fund)? Well, as far as the question is about investing in PPF, the maximum limit of investing in PPF is Rs.70,000 per year. And this amount is tax deductible under section 80C. So i think every one should invest up to Maximum amount in PPF because it gives tax benefits as well as guaranteed higher returns.

Now, let us discuss about how much one should invest in stocks (Equity)? Well, this is really depends on one’s risk appetite, age, number of dependents and future financial goals.

I personally follow the rule of thumb. According to it, 100 minus your age should be the Equity allocation in your portfolio and the rest should be in debt and other asset classes.

However, ideally you should invest your all of those money in equity that you don’t need for at least next 10 years. This is because in the long run, Equity has outperformed any other asset class in the world. Equity has the potential to make you rich and financially free. No other asset class has this much potential.

So according to me, you should take a piece of paper and pencil and than write down your short, medium and long term financial goals on it. And after that put your long term financial goal money (more than 10 years) in Equity, medium term financial goals (3-5 years) in debt and short term (Less than 3 years) in Liquid Assets such as short term debt funds, Cash on Hand, Savings Account…etc…