Mutual Funds

Your Fund Portfolio

K Venkatasubramanian | Updated on June 01, 2014


I am 39 and wish to invest in mutual funds to fund my children’s higher education. My time horizon is 10 years. I also wish to invest for 20 years towards my retirement. I recently started investments in Birla Sun Life Frontline Equity – ₹2,000 and HDFC Balanced – ₹1,000. I can invest ₹6,000 a month. Please give suggestions.

G Srinivasulu

Given your goals — children’s education and retirement — you must prioritise. Since education is non-negotiable, allocate a bulk of your surplus for your children’s education. Set aside a small sum for your retirement. Later on, as your surplus increases and you are through with the first goal, direct all your savings towards your retirement.

You appear a cautious investor as you have opted for a large-cap and a balanced scheme. Given your long investment horizon, you can take a bit more risk and take exposure to large-caps, at least on a greater scale. Split ₹6,000 as follows: invest ₹2,500 each in ICICI Pru Top 100 and Birla Sun Life Frontline Equity. If you are averse to taking more risks, retain HDFC Balanced, else split ₹1,000 equally among the schemes listed earlier. Over the long term, achieving a corpus entails investing in a balanced portfolio with allocations to equity (mutual funds), debt (PPF, RDs, FMPs, tax-free bonds and FDs), gold and if possible real estate.

Set a target corpus and book profits if you reach your goal ahead of time.

I am a student and have saved ₹40,000. I wish to invest this money productively but am confused as there seem to be too many avenues. Please suggest the best course of action.

- Muzammil

Where you should be investing your savings depends on when you need the sum and your risk appetite. If you need it in less than three years, invest in fixed deposits.

If you have a timeline of five years, consider equity or balanced funds. This entire sum should not be parked in one instalment. This exposes your entire investment to market risks. Instead, spread it across, say, three to four months. Choose from funds such as ICICI Pru Focused Bluechip, UTI Opportunities, HDFC Balanced and Quantum Long Term Equity, if you have a five-year time line. Gold may not be such a good idea right now as it tends to underperform when equity markets rally. Also, it can at best be a hedge against inflation over the long term.

Published on June 01, 2014

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