I am a retired bank employee with no liabilities. I have invested lump-sum amounts ranging from ₹25,000 to ₹50,000 in each of the following funds during the last two years — Axis Equity, DSPBR Top 100, ICICI Pru Focused Bluechip, Franklin India Bluechip, and Reliance Equity Opportunities. Should I redeem them and invest in gold coins? I have also started SIPs of ₹5,000 per month each in HDFC Midcap Opportunities and Franklin India Smaller Companies Fund in July 2014 and plan to continue for three years. I want to start SIPs of ₹2,500 each in two other funds. Please suggest suitable options.

Thomas Naidu

Post retirement, capital protection and regularity of income take top priority. We assume you are eligible for pension and have made enough ‘safe’ investments in debt instruments. Also, if you don’t yet have a medical cover for you and your dependents, it is advisable to obtain one.

You have chosen a good set of predominantly large-cap funds that also have a strong track record. It would be better to remain invested than redeeming them to invest in gold coins. Gold prices have been going through a rough patch in the last 1-2 years. Gold coins also don’t score high on liquidity. But review the performance of these funds periodically and book profits to tide over liquidity requirements and for moving to debt investments. Coming to your SIP investments, the funds you have chosen are seasoned performers. But entering high-risk, mid-cap category funds at a time when the markets are hitting highs is not advisable for senior citizens. Since you have entered these funds only in July 2014, you can make the minimum number of SIPs required in these funds and stop further investments.

You can invest in MIPs (Monthly Income Plans) instead, which have relatively lower risk. They give you good downside protection from market vagaries, besides periodic income in the form of dividends. HDFC MIP – Long Term and Canara Robceo MIP are good options. Further SIPs of ₹2,500 can be made in Tata Balanced and ICICI Pru Balanced funds.

I want to invest for my one-year-old daughter's wedding in the future. My plan is to get a sum of ₹30 lakh after 20 years through SIP investments. I want to take low risks. How much should I invest per month and in which scheme?

Guriya Kumari

If you want a corpus of ₹30 lakh after 20 years, you need to invest roughly about ₹3,000 per month. This is assuming your investment will earn a conservative compounded annual return of 12 per cent during this period. Given your long investment horizon, you can take marginally more risks. You can opt for a large-cap fund with a strong record. Park ₹3,000 in ICICI Pru Focused Bluechip Equity. Also, keep in mind that the purchasing power of ₹30 lakh twenty years later may not be the same as it is today. So if your surplus increases over the years, you can allocate additional sums.

I am 26 years old. I have been investing ₹1,000 per month in Franklin India Bluechip since October 2012. Since this fund is not performing well currently, should I continue investing in the same? I am also planning to invest ₹2,000 more per month. Where can I put this money?

Goutham Jeyaraj

You are right about your observation on Franklin Bluechip. An SIP in this fund since October 2012 would have given a return of only around 25 per cent, while other established large-cap oriented funds such UTI Equity, UTI Opportunities, BNP Paribas Equity, or even ICICI Pru Focused Bluechip Equity would have yielded over 30 per cent returns.

While you need not pull out the investment, you can stop SIPs in Franklin Bluechip right now. Move to UTI Equity instead and invest ₹1,500 there.

For the additional ₹1,500, you can consider investing in a multi-cap fund if you have a slightly higher risk appetite to pep up your overall returns.

Park this amount in Reliance Equity Opportunities. Over a period of time, allocate sums to debt investments such as FDs and PPF to have a balanced portfolio.

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