I am 30 years old. I have just started investing through SIPs of ₹1,500 each in Franklin India Smaller Companies Fund, Franklin India High Growth Companies and Mirae Asset Emerging Bluechip. I would like to know whether I can continue with this or change it to HDFC Midcap Opportunities in place of the Mirae fund. I also would like to know if this investment will amount to ₹50 lakh, 25 years from now.
Arun Kumar
You are very comfortably placed as far as meeting your target goes. About ₹4,500 invested each month, even assuming a very conservative annual return of 10 per cent, should fetch you at least ₹60 lakh. You also appear to have a high risk appetite judging by your fund choices, which invest primarily in mid-cap stocks.
This can fetch you even higher returns. The funds you are investing in, all have strong performance records. But, a rebalancing of your portfolio is necessary. For one, it is not prudent to concentrate all your mutual fund investments in high-risk funds even if you have a long horizon.
Such funds should be combined with stable large-cap funds to balance out the risk and protect your portfolio from downside. Second, for ₹4,500 it is enough to invest in two funds.
Therefore, split this amount equally between Mirae Asset India Opportunities and Franklin India Smaller Companies. This way, you have a large-cap-oriented scheme and a mid and small-cap fund too. Keep an eye on the funds’ performance and rebalance your portfolio if needed.
I am 44 and work for a private sector undertaking. I want to save ₹1 crore, seven years from now. I’m investing ₹14,000 a month through SIPs in the following manner: ₹ 5,000 each in BNP Paribas Equity and ICICI Prudential Balanced Fund, and ₹4,000 a month in Mirae Asset India Opportunities. I want to make an additional investment of ₹36,000 a month towards my goal.
I have identified the following schemes: ₹16,000 a month in Franklin India Ultra Short Term Bond Fund; ₹10,000 a month each in SBI Bluechip and BNP Paribas Equity. Please let me know if this plan needs changes.
A Ganesh
About ₹50,000 invested each month for the next seven years should amount to around ₹74 lakh at a reasonable return assumption of 15 per cent annually. This is well short of your target.
You could perhaps make up, given that you have already been investing substantial amounts. Else, you will need to increase your monthly investments.
Your fund choices also suggest that you have a low risk appetite. In any case, since your time horizon is also relatively short at seven years, a high-risk portfolio may not be wise. Split the ₹50,000 you want to invest thus: Invest ₹7,500 each in BNP Paribas Equity and UTI Equity; ₹6,000 each in Mirae Asset India Opportunities and Franklin India High Growth Companies; ₹6,000 each in Birla Sun Life Dynamic Bond Fund, Franklin India Corporate Bond Opportunities Fund and ICICI Pru Balanced. Park the final ₹5,000 in HDFC Mid-cap Opportunities Fund.
This way, your portfolio has a good portion in safer debt funds with the equity portion balanced out between stable large-cap funds with a multi-cap and mid-cap fund added to improve overall returns.
My husband runs a retail business and so our monthly income is not predictable. Could you please suggest mutual funds for us, to invest through SIPs, for ₹20,000?
Sonal
Since your income is unpredictable, stick to less volatile funds. Invest ₹20,000 as follows: ₹4,000 each in Franklin India Bluechip, Axis Equity and Birla Sun Life Frontline Equity. Invest ₹3,000 each in UTI Dynamic Bond fund and BNP Paribas Midcap, and the balance ₹2,000 in Tata Balanced fund.
Thus, your portfolio will be centred on stable large-cap funds with protection from debt and balanced funds. If you cannot commit to monthly investments, set aside money and invest it in a lumpsum at regular intervals.