Investing: Rishi Nathany

I can't afford a health insurance policy. But I want to save for medical emergencies. I am married and stay with my parents (aged more than 60). Which instrument should I look at?
I think it would take less money to buy health insurance than save for medical emergencies for you and your wife (though you have not mentioned your and your wife's age). Since you stay with parents, not vice versa, I am assuming they are financially independent. Today, any medical emergency could set you back by a lakh or so, while a floater health policy for a 40-something couple such as you and your wife (assuming you are in that age bracket) wouldn't cost more than a few thousand a year. Therefore, you should definitely opt for a suitable medical insurance policy for you and your wife and, thereafter, think of creating a fund for medical emergencies.

Why should I necessarily invest in a financial instrument, considering banks, too, pay more than five per cent interest on a savings account balance? I don't like risking my investment.

Given inflation is about seven per cent per annum, would earning five per cent a year help you? Suppose you earn five per cent per annum nominal return on your money and inflation reduces its purchasing power seven per cent every year, your real rate of return is a negative two per cent. Therefore, the real value, or purchasing power, of your money would keep falling every year. So, you have to make investments that, at the least, help you retain the value of your money, if not increase it. If you are risk-averse, you could look at various fixed-income instruments such as bonds, bank and corporate fixed deposits and small savings schemes that give you a nominal rate of return that is much higher than those on savings bank account balances. Within these instruments, too, you could choose safer, government-backed investments, depending on your degree of risk-aversion.

I have always invested in stocks alone. For about 10 years, I have held the likes of Tata Steel, Tata Motors, ITC, TCS and Infosys and have created a good stock portfolio. However, now that I have responsibilities, I also want to consider safer investments. My age is 35. Should I start with the Rajiv Gandhi Equity Savings Scheme (RGESS)?
While age is on your side, in terms of investing in equities, you should definitely distribute your investments across various asset classes, not just in equities. Move to safer investments such as fixed-income instruments, if your situation demands so. As RGESS is an equity scheme, your purpose of moving to safer investments would be defeated. Moreover, as you are already an equity investor, you would not be eligible for tax benefits under RGESS.

The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in

Today, Dalmia Securities' Chief Executive Officer Rishi Nathany answers your questions