Investing in India: A Practitioner’s Playbook

You don’t need 20 funds or a trading screen. You need a clear goal map, a simple portfolio you can stick to, and a disciplined rebalancing habit. This guide is the playbook I share with working professionals who want results without noise.

Non‑Negotiables Before You Invest

1. Emergency fund: 6–12 months of expenses in savings, liquid fund, or short‑term debt. This keeps your equity plan intact when life happens.
2. Insurance: Pure term cover at 10–15x annual income; health cover of at least ₹10–20 lakhs family floater. Never mix insurance and investing.
3. High‑cost debt: Pay off credit card or 18–24% personal loan debt before you chase returns.

The Building Blocks That Actually Work

Equity (growth engine)

• Use broad‑market index funds or a small, consistent set of diversified equity funds. Simpler beats clever.
• SIP for cashflow; for large lump sums, deploy in tranches or via STP over 3–9 months depending on volatility.
• Smallcap FOMO is real. Cap at 10–20% of equity, and only if you can handle deep drawdowns.

Debt (stability and sleep factor)

• Match duration to goal horizon. For money needed within 3 years, stick to liquid, ultra‑short, money market, or target‑maturity funds that mature before your goal.
• Prefer high‑quality debt; avoid chasing extra yield with credit risk unless you fully understand default and downgrade cycles.
• Use PPF and EPF for long‑term debt allocation; they are tax‑efficient anchors.

Gold (shock absorber)

• 5–10% through Sovereign Gold Bonds (SGB) or ETFs. SGB is tax‑efficient at maturity; ETFs offer liquidity. It’s a portfolio diversifier, not a core growth asset.

Real assets via markets

• REITs/InvITs can add income diversification. Treat them as equity‑like for risk; size positions modestly and focus on underlying cash flows and debt metrics.

Portfolio Blueprints (by Goal Horizon)

Use these as starting points; adjust to your comfort and cashflow.

• Less than 3 years: 0% equity, 90–100% high‑quality debt, optional 0–10% gold. Prioritise liquidity and capital protection.
• 3 to 7 years: 20–40% equity, 50–70% debt, 0–10% gold. Keep rebalancing discipline.
• 7 to 15 years: 60–80% equity, 15–35% debt, 5–10% gold. This is the compounding zone.
• 15+ years: 70–85% equity, 10–25% debt, 5–10% gold. Glide down equity gradually 5–10 years before the goal.

Rebalancing rule of thumb: Once a year or when any allocation drifts by 5% absolute or 25% relative from target. Rebalancing is where you “buy low, sell high” mechanically.

A Clean, Working Setup

• Equity core: 1 Nifty 50 or Nifty 500 index fund, plus optionally 1 midcap fund. Add smallcap only if you understand volatility.
• Debt core: Mix of liquid/ultra‑short for near‑term needs and PPF/EPF or target‑maturity funds for dated goals. Match fund maturity with your goal date.
• Gold: SGB for long‑term holdings; ETF for liquidity.
• Keep the fund count low: 3–5 total funds can cover 95% of needs.

SIP And Cashflow Playbook

• Date: Set SIPs 2–4 days after salary credit to avoid failed debits.
• Step‑up: Increase SIPs 8–12% every year; this matters more than picking the “best” fund.
• Bonuses/lumpsum: If markets are calm, deploy in 2–3 tranches over 2–3 months. If volatile, use a 6–9 month STP from liquid to equity.
• Goal buckets: Separate SIPs by goal to avoid emotional selling.

Tax And Product Hygiene (India‑specific)

• Equity funds: LTCG at 10% above ₹1 lakh gains per FY; STCG at 15%. Dividends are taxed at your slab.
• Debt funds: For investments since Apr 2023, gains are taxed at slab rates; no indexation. Align category and duration to avoid nasty surprises.
• ELSS: 3‑year lock‑in; useful for Section 80C within the ₹1.5 lakh limit if you need it.
• PPF/EPF: EEE and excellent anchors for the debt sleeve.
• SGB: Semi‑annual interest is taxable; capital gains are exempt if held to maturity. On‑exchange sale before maturity can trigger capital gains tax.
• NPS: Additional ₹50,000 deduction under 80CCD(1B). Useful for high earners comfortable with the lock‑in and withdrawal rules.

Selection Checklist (Keeps You Out of Trouble)

• Expenses and tracking: For index funds, check tracking difference and expense ratio. For active funds, look at consistency across market cycles, not the last year’s chart.
• Risk metrics: Compare drawdowns and volatility against peers; avoid funds that shine only in bull markets.
• Mandate discipline: Avoid style‑drifting funds and fancy themes unless it’s a contained satellite bet.
• Debt quality: Read the portfolio. If you don’t recognise the names or see concentrated lower‑rated paper, skip.
• Direct vs Regular: Pay for advice if it saves you from bigger behavioural mistakes; otherwise, use direct plans and keep costs low.

Common Traps I See Often

• Over‑diversification: Owning 12 funds gives you index‑like returns with higher effort. Keep it tight.
• Smallcap mania: Enjoy the party, size the bet. Accept 40–60% drawdowns as part of the deal.
• Stopping SIPs in corrections: That’s when your future returns are minted. If cashflow is tight, reduce, don’t stop.
• Mixing short‑term goals with equity: Tuition due next year does not belong in equities. Ever.
• Ignoring taxes and exit loads: Plan switches near FY end and respect lock‑ins.

Quick Start Plans

• ₹10,000 per month beginner: ₹6,000 Nifty 500 index, ₹2,000 midcap, ₹2,000 PPF or short‑term debt. Step‑up 10% yearly.
• ₹1,00,000 lump sum with a 10‑year horizon: 30% now into equity, 40% via 6‑month STP from liquid to equity, 20% target‑maturity debt maturing in 8–10 years, 10% SGB/Gold ETF.

Review once a year, rebalance, and keep adding. The boring plan you execute beats the brilliant plan you abandon.

Helpful Tools

• SIP Calculator: Project outcomes and test different step‑up rates.
• Goal Planner: Map each goal to its own asset mix and timeline.
• PPF Calculator: Estimate PPF maturity amounts for the debt sleeve.
• Income Tax Calculator: Model post‑tax returns and optimise 80C/80D/80CCD.

Use these to turn intent into numbers and numbers into action.