I am 24 years old and have started investing Rs 1,000 in Reliance Equity Opportunities through the SIP mode, for the next three years. Also, I would be investing Rs 500 in the Tata Balanced Fund for one year. I wish to invest another Rs 1,000. Kindly suggest schemes where I can park the same and let me know if my investments are on the right track.

Trupti Bolke Starting off early in investing is a good move that will help you achieve long-term goals.

But if your investment horizon is for just three years for the equity fund and one year for the balanced scheme, you may not be able to achieve any meaningful returns. Even five years is not sufficient to gain inflation-beating returns, if the returns of equity funds over the past five years are anything to go by.

Since you are young, continue SIPs for at least 7-10 years and increase investments when your surplus improves. You have chosen a multi-cap fund in Reliance Equity Opportunities. It has a good track record over the past four-five years. Invest Rs 1,500 in it. In Tata Balanced, you can park Rs 1,000. As for assessing whether your portfolio is on the ‘right’ track, we need to know your goals and the timelines in which you wish to reach them.

*** I am a 19-year old college student and have been investing Rs 6,000 through monthly SIPs in HDFC TOP 200. I aim to accumulate Rs 30 lakh in 10 years. The fund’s underperformance in the last few quarters makes me anxious. Should I switch to a better fund?

Bhaskar Jha

It is heartening to note that you have started saving prudently even while still pursuing your education. But your goal of accumulating Rs 30 lakh in 10 years appears quite ambitious. If you invest Rs 6,000 every month for a period of 10 years, the annual returns must be nearly 25 per cent for you to achieve the target. A more realistic return expectation of 12 per cent would leave you with a corpus of close to Rs 14 lakh. Coming to your investment, yes, HDFC Top 200 has underperformed over the past year or so. But it has an exceptional track record over the past 10 years. The scheme does lag peers in short phases, but rebounds well over the long term. Nonetheless, you must invest in more funds to diversify rather than put all your money in a single scheme. Split Rs 6,000 as follows: Invest Rs 2,500 each in HDFC Top 200 and ICICI Focused Bluechip Equity. Park the balance Rs 1,000 in IDFC Premier Equity.

Since you are young, we presume you can take moderate to high risk in your investments.

*** I am 26 and work for a private company. I wish to invest Rs 5,000 every month for one year. My requirement is assured capital appreciation of 15-18 per cent. Please suggest schemes where I can invest to generate such returns.

Rajarshi Dasgupta

There are no schemes available that can offer you assured returns in the range of 15-18 per cent, that too, within a year. In fact, no market-linked product can ever give you assured returns. The best fixed deposit can give you a return of 9.5 per cent, while a fixed maturity plan may offer 10 per cent. Both these returns are pre-tax. So, you need to drastically temper your returns expectation.

*** I am 31 years old and started investing Rs 16,000 in mutual funds through the SIP mode from April 2010. I would like your views on my portfolio as to whether it would help me reach my target of Rs 2 crore in 20 years.

Large-cap: ICICI Pru Focused Bluechip – Rs 2,000; Large and mid-cap: Quantum Long Term Equity – Rs 2,000; Mid and small cap: IDFC Premier Equity Plan A – Rs 5,000; HDFC Mid-Cap Opportunities – Rs 3,000; Tax-Saving: Canara Robeco Equity Tax Saver – Rs 4,000; Debt: BSL Dynamic Bond – Rs 50,000

Susnata

With regular investments, you appear to be well-placed to reach your targeted corpus. If the Rs 16,000 that you invest every month is able to earn a return of 12 per cent annually, you should be able to reach Rs 2 crore in the next 19-20 years.

You have chosen a set of quality funds in your portfolio. But some minor rearrangement with respect to allocation of amounts needs to be done. Split Rs 16,000 as follows: Invest Rs 4,000 each in ICICI Focused Bluechip and Quantum Long Term Equity. Invest Rs 2,500 each in IDFC Premier Equity and HDFC Midcap Opportunities.

With reference to tax saving funds, you need to note that you must not mix investment and tax saving. For a very long-term goal you can invest in regular diversified equity funds instead of tax saving schemes. So, stop SIPs in Canara Robeco Equity Tax Saver and start investments in Canara Robeco Equity Diversified, a multi-cap scheme with a strong long-term track record. Invest the balance Rs 3,000 in this scheme. You can retain investments in Birla Sun Life Dynamic Bond.

Apart from mutual funds, you must also invest in debt (FDs, RDs, FMPs, PPF and NSC), gold and real estate over the long term in order to build a balanced portfolio.

Review the performance of your schemes once every year and take corrective action, if necessary. Book profits or move proceeds to safer debt avenues, in case you achieve your target ahead of time.

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