Mutual Funds

Fund Talk: Start early, with clear goals

K. VENKATASUBRAMANIAN | Updated on March 09, 2013

Take stock of your portfolio once every year and take corrective action and rebalance, if necessary.

I recently started investing in the following funds: ICICI Pru Focused Blue Chip, Rs 4,000; Reliance Equity Opportunities, Rs 4,000; Quantum Long Term Equity, Rs 4,000; SBI Emerging Businesses, Rs 3,000; IDFC Premier Equity, Rs 3,000; HDFC Balanced, Rs 2,000.

I am 39 and work for a public sector bank. I earn a monthly income of Rs 58.000. My expenses are Rs 20,000. Apart from these I am investing Rs 5,000 in a bank RD which carries 10.10 per cent interest. The tenure of the RD is 10 years. Another Rs 3,500 is invested in Postal RD. I have liquid cash of Rs 4 lakh in deposits.

I would like to have an amount of Rs 1 crore in 12-15 years’ time for my two daughters’ education and marriage needs. I can increase investment in mutual funds by Rs 5,000 within two years. Please advise me and let me know whether I can meet my financial goal with the choice of funds that I have made and amounts invested therein.

A.Venkata Sivaiah

By having a sufficiently long investment horizon and clearly stated goals you have made a good start towards achieving your goals.

If you invest Rs 20,000 now and step it up with another Rs 5,000 after two years, you can comfortably reach your target of Rs 1 crore within 13 years, if annual returns are 12 per cent.

This return expectation is quite reasonable, may be even a tad conservative.

You can reach the target with your mutual fund investments alone. The other investments in bank and postal RDs would provide further cushion in reaching your goals and the surplus can be directed towards other financial targets.

Coming to your mutual fund portfolio, you have chosen a set of funds with a fairly strong track record. But there seems to be a tilt towards mid-cap schemes, you have two funds in IDFC Premier Equity and SBI Emerging Business and a multi-cap fund in Reliance Equity Opportunities that accords high weightage to mid-cap stocks.

But given your investment horizon of over 10 years and these funds’ track record, the risks appear tempered.

Of the additional Rs 5,000 that you wish to invest, Rs 3,000 can be split equally between ICICI Pru Focused Bluechip Equity and Quantum Long Term Equity. The balance Rs 2,000 can be invested in HDFC Gold Fund or Goldman Sachs Gold BeES ETF.

Take stock of your portfolio once every year and take corrective action and rebalance, if necessary. If you meet your target ahead of time, sweep the amount to safer debt instruments.

*** I have been investing in mutual funds through the SIP (systematic investment plan) route for the last 1.5 years. I have been investing Rs.4000 each in ICICI Pru Focused Bluechip Equity, HDFC Balanced and Quantum Long Term Equity.

I also invest Rs.2000 in IDFC Sterling Equity.

I have an investment horizon of seven years and want to build a corpus of Rs 25 lakh to reconstruct my house. Kindly advise.


Achieving a target of Rs 25 lakh over a seven-year period is quite possible for you.

If your current monthly investments of Rs 14,000 and the amounts that you have already parked for the past 1.5 years grow at about 14 per cent annually, you will be able to achieve your financial goal in another seven years’ time.

Coming to your portfolio, you can retain ICICI Pru Focused Bluechip Equity, HDFC Balanced and Quantum Long Term Equity in your portfolio and invest Rs 4,000 in each of these three schemes.

But replace IDFC Sterling Equity, and switch to IDFC Premier Equity, a high quality mid-cap fund with a proven track record and park Rs 2,000 there.

*** I am 70 years old and live with my wife in my own house and have provided adequately for our retirement.

I wish to make a one-time investment — with a long-term perspective — for my grandchildren who are US citizens aged 5 years and 3 years. My limit is Rs 1 lakh for each. Which mutual funds would be suitable for the purpose?

Winston James

It is nice to note that you wish to invest for the sake of your grandchildren. HDFC Children’s Gift Fund – Investment Plan may be an appropriate choice for you.

This scheme allows you to invest in the name of minors and has a defined lock-in period. The fund, which is a balanced scheme, has delivered quite well over the past 10 years and is among the best in the category. You can invest Rs 1 lakh each in the name of your grand children.

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Published on March 09, 2013

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