Ther are Two awys to save and invest - goal-based and risk-profile based.Goal based investing involves setting aside a certain amount of money in a particluar financial product at regular intervals to meet a particular goal.For instance,you may regularly contribute to a diversified eguity mutual fund to meet your children's education expenses and set aside your diwali bomus in a liquid fund because you wish to purchase a car within the next six months.Risk profile based investing involves investing a certain proportion of your money in different types of financial products so that overall,the product mix suits your risk profile.For instance,if you are risk averse,you may invest about 25 per cent in equity and equity based products,60 per cent in debt and debt based products and remaining 15 per cent is assets like gold,etc.However,what investors don't realize is that both these are two sides of the same coin.You must ensure that while you use goal-based investing,your overall investment product mix should suit your risk profile;when you use risk profile based investing,your overall prouduct mix should be able to meet the cost of your goals when they are due for fulfilment.
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