I am 38 and my husband is 41. We work for a private company and have one son who is seven years old. The monthly income of our family is Rs 60,000. We are investing Rs 19,000 monthly in the following mutual funds through the SIP (systematic investment plan) mode:

Reliance Regular Savings Equity: Rs 1,500, Birla Sunlife Frontline Equity: Rs 1,000, HDFC Equity: Rs 4,000, HDFC Midcap Opportunities: Rs 3,000, HDFC Prudence: Rs 5,000 , HDFC Top 200: Rs 2,000 and IDFC Premier Equity: Rs 2,500.

Kindly advise as to whether the SIPs can be continued in the above funds. Is it safer in the long run? Also, please guide us on when we can terminate the investment, say, for example, after 15 years or 20 years. Is the apportioning of the total amount appropriate?

Kalyani Sundari You are treading along the right path by investing systematically over the long term to achieve your goals.

Coming to your portfolio, you are spreading your investments across too many funds.

For the Rs 19,000 that you are investing a maximum of five funds would suffice. Exit Reliance Regular Savings Equity and invest more in Birla Sun Life Frontline Equity as the latter has a stronger long-term track record. Invest Rs 5,000 in Birla Sun Life Frontline Equity.

HDFC Equity and HDFC Top 200 have considerable portfolio overlap. Although both funds have an excellent performance record over the long term, you can retain HDFC Equity alone and invest Rs 5,000 in the scheme.

Invest Rs 3,000 each in HDFC Midcap Opportunities, IDFC Premier Equity and HDFC Prudence.

Your portfolio would have three funds from the HDFC stable. If you would like to diversify across fund houses, you can replace HDFC Midcap Opportunities with ICICI Pru Discovery. Alternately, you can step up investments in IDFC Premier Equity.

You have to review your portfolio every year and take corrective action and rebalance.

Ideally, you must remain invested for 10-15 years for your SIPs to work fruitfully. But as a precaution, you can sell the funds if your targeted corpus is achieved ahead of time and move the proceeds to safer avenues such as debt funds or bank deposits. You can also book profits in case of any abnormal rally in the market.

The other important aspect you must note is that for reaching all your goals, you must have a balanced portfolio.

We hope you have made appropriate levels of investment in debt (bank FDs, RDs, NSC, PPF etc), gold, and real-estate.

As you age, decrease investment in equity and mutual funds and increase allocations to other safer avenues.

*** I am 26 and earn a salary of around Rs 20,000 a month. I had invested in Reliance Gold Savings Fund from August 2011 through SIPs of Rs 2,000. After 10 months, I stopped the SIP. Should I withdraw/ reinstate/continue my monthly SIP in this fund? Also, I started another SIP in Axis Gold Fund from February 2012 which I am still continuing. But it has not done well in my opinion and so should I redeem it so that I don’t make a loss on it?

I have also started SIPs of Rs 2,000 each this year in ICICI Pru Discovery and HDFC Balanced. I have been considering making a lumpsum investment in SBI Emerging Businesses. Please review my investments. As of now, I can take high risks in my investments. My objective is wealth creation.

Aathira It is nice to note that you have started investing at such an early stage of your life and career.

Your objective of wealth creation would definitely be possible if you invest in the right avenues for the long term of, say, 10-15 years.

Now, as with several investors who take the ‘flavour of the month’ approach to investing, you too have parked money in gold funds as that was the ‘in’ theme in 2011. While gold is a reasonable investment avenue, it cannot form the core of your investments and must at best be considered as a hedge against inflation and a suitable diversifier.

Of course, you can invest in gold savings funds, but not in too many of them. You have already exited Reliance Gold Savings. Exit Axis Gold Fund and invest in HDFC Gold instead and park Rs 2,000 there. ICICI Pru Discovery is a fund with a good track record and can be continued.

Instead of making a lumpsum investment in SBI Emerging Businesses, start a SIP in the fund as mid-cap funds are generally characterised by high volatility and hence timing of markets for such investments is not easy.

Right now, your portfolio comprises two mid-cap funds, a gold scheme and a balanced fund. Since you have stated that you have an appetite for higher risk, consider replacing the balanced fund with Quantum Long Term Equity or Reliance Equity Opportunities.

Over the long run, you must build your portfolio in such a way that you have a blend of large-, mid- and multi-cap funds across fund houses in your kitty.

Investments must also be made in debt and real-estate, as and when your surplus increases. Always have an emergency/contingency fund ready before starting investments. Also, take a term cover for protection.

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