I am a 23 and am working with a consultancy. I wish to start SIPs in mutual funds to grow my savings and to become secure financially. I want to start by investing Rs 15,000 every month and gradually increase it as my pay package grows.

My risk appetite is high as I have no immediate responsibilities. I plan to accumulate around Rs 25-30 lakh in 7-8 years’ time. I am a student of value investing and want your views on PPFAS Mutual fund as I am quite keen on investing in it. Please advise.

Aditya It is heartening to note that you have embarked on saving for the long term so early into your career. With a high risk appetite and a definite financial goal, you are well placed to achieve your target.

If you invest Rs 15,000 every month for a period of eight years and the returns generated are 13 per cent annually, you will comfortably reach the target of Rs 25 lakh.

Now, spread Rs 15,000 as follows: Invest Rs 4,000 each in ICICI Pru Discovery and IDFC Premier Equity, two high-quality mid-cap funds with an excellent long-term track record.

Park Rs 3,500 each in Quantum Long Term Equity and UTI Opportunities, a couple of multi-cap schemes which have delivered consistently.

If you reach your stated target ahead of time, move the proceeds to safer debt investments.

It is fine to invest more in equity mutual funds early on in your career. But note that for building a corpus over the long term, you will need to have a balanced portfolio with investments in debt (PPF, FDs, RDs, NSC etc), gold and real estate. As your surplus increases, deploy funds in these avenues as well.

Coming to the second part of your question, value investing does have its own benefits, as entry and exit would be backed by strong fundamentals and compelling valuations.

PPFAS Long Term Value has a track record of barely a couple of months. Its initial portfolio indicates that it is heavy on mid- and small-cap stocks, which may be a tad risky in the current markets.

Besides, through Pru Discovery and Premier Equity, you would already have a couple of quality mid-cap funds in your portfolio . Watch out for its performance record for another 6-10 months before taking the plunge.

*** I have been investing Rs 5,000 per month in each of the following funds: IDFC Premier Equity, L&T Equity, HDFC Top 200, ICICI Pru Focused Bluechip and Franklin India Bluechip through the SIP mode for the past four years.

Apart from this I also have invested Rs 50,000 each as a lump-sum in DSP Blackrock Top 100, ICICI Pru Balanced Fund and HDFC Top 200. I have investment in debt products such as RDs, FDs, PPF and EPF etc.

My time horizon is 15 -20 years and I want to accumulate Rs 1 crore in the next 20 years. Please advise whether I should continue with the present investments or make any modifications to meet the goal.

Bal Govind You are well on course to achieve your stated financial goal. Since you have already been investing for the past four years, if you continue to save Rs 25,000 every month for the next 11-12 years and the returns on the portfolio is 10 per cent annually, you will be able to reach Rs 1 crore easily.

Most of the funds in your portfolio have performed quite well over the years and make for good choices.

Among the funds where you are making SIP investments, you can consider replacing L&T Equity with a stronger Birla Sun Life Frontline Equity, fund that has delivered top-quartile returns over a 10-year period.

Because your return expectation is quite reasonable, it would be advisable to invest in a less risky portfolio, mostly comprising large-cap and balanced funds.

You have followed the above path, but your portfolio can do with some minor churn. IDFC Premier Equity is a mid-cap fund with an excellent performance record.

If you have a reasonably high risk appetite, continue investing in it or consider replacing it with HDFC Balanced which would lend added stability to your portfolio. The other schemes may be retained.

The other funds where you have made lump-sum investments too need some modification.

There is duplication with respect to HDFC Top 200 as you are also running a SIP in the scheme. DSPBR Top 100 is a large-cap fund, but you already have many of them in your portfolio and hence there could be considerable overlap in holdings.

You can exit these schemes and invest lump-sum amounts in UTI Opportunities and Quantum Long Term Equity. ICICI Pru Balanced can be retained.

Review your portfolio at least once every year and take corrective action, if necessary and weed out underperformers. If you reach your targeted corpus ahead of time move the proceeds to safer bond funds or fixed deposits. Also book profits in case of abnormal rallies in the market.

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