Question

If you were gifted a $1 million, how would you invest it? Please describe your investing philosophy and provide rational behind choosing a particular investment.

Answer 1

The investment philosophy of any individual is dependent on various factors, such as risk apetite of the individual, stage of his/her life, etc.

If a person is single and does not have any other financial responsibility, he/she can afford to invest in high risk investment options such as direct equities, equity mutual funds, etc.

However, if a person is married and someone is financially dependent on him/her, the risk apetite of the individual decliens and the person looks for investments in moderately risky securities such as balanced mutual funds.

If I have to take my example, I am currently married with no children and my wife is a non-working individual, hence my risk taking apretite is moderate. I prefer to invest in equity mutual funds and balanced mutual funds. I invest moderately in direct equities.

As a rule of thumb, investments in equities are generally considered to be 100-Age. E.g. if your age is 30, then you should invest 100 - 30 = 70% in equities (either directly or through mutual funds).