Mutual Funds

Your Fund Portfolio

K Venkatasubramanian | Updated on December 21, 2014

I retire in November 2015. I expect retirement benefits to the tune of ₹60 lakh. I have a daughter whose marriage may take place in a year or two. The likely expenditure for the marriage may be around ₹15 lakh. Kindly advise me on how to go about managing the balance amount of ₹45 lakh so as to lead a comfortable retired life.

Mukundan M

Post-retirement, securing the corpus saved is of paramount importance. This means that you need to take minimal risks while investing for your retirement kitty.

Ideally, you should have saved separately for your daughter’s marriage and should not have been dependent on your retirement benefits for the purpose.

Now, after setting aside ₹15 lakh, you will have to be very prudent with the balance ₹45 lakh.

Invest ₹25 lakh in a safe bank deposit. Park ₹10 lakh in the Senior Citizen Savings Scheme with a post office, which will give you a monthly payout. You can use this for your routine expenses.

The balance ₹10 lakh can be parked in another bank deposit which pays interest on a monthly basis.

The monthly interest from this deposit can be invested in a couple of monthly income plans (MIPs). You can invest the interest amount in Reliance MIP and Canara Robeco MIP. Take the dividend option. Both these schemes have been regular in their dividend payouts. These MIPs invest mostly in debt and a small portion in equity; so you may be able to generate returns better than bank deposits.

Please take a medical cover with any insurer, in case you haven’t taken one already. Although the premiums may be relatively high for citizens nearing retirement, you must take a cover for ₹5 lakh at least as soon as possible.

I am 35 and would like to invest ₹10,000 a month for the next 20 years in equity mutual funds. What is the corpus I can accumulate over this period? Please suggest suitable funds.

Puneet K

Since mutual funds are market-linked products, there can be no assurance of returns. As an illustration, however, if you invest ₹10,000 every month for 20 years and can generate annual returns of a little over 12 per cent, you would be able to accumulate ₹1 crore.

You can split ₹10,000 as follows: invest ₹3,000 each in UTI Equity and Birla Sun Life Top 100. These are predominantly large-cap funds with proven track records. Park ₹2,000 each in HDFC Mid-cap Opportunities and ICICI Pru Value Discovery. These are quality mid-cap funds. But if you do not want to take more risk, you can replace one of the mid-cap schemes with Franklin India Flexicap, which invests in stocks across market caps, though it still does have a bias to large-cap stocks.

Review the schemes in your portfolio regularly and take corrective action, if necessary and rebalance.

Try to also invest in other asset classes such as debt, gold and real estate, so as to create a balanced portfolio.

I am 28 and have been investing in mutual funds for the past one year. These include : Birla Sun Life Top 100, HDFC Balanced, Franklin India Smaller Companies, Reliance Equity Opportunities and Reliance Tax Saver. I purchase units on a monthly basis by allocating ₹2,000-3,000 to each of these schemes, but not through the SIP route. I want to invest an additional ₹2,000-3,000 on a monthly basis. Should I purchase additional units instead of opting for an SIP?

Abhinav Sinha

You can buy units at different dates if you are confident about being systematic and are not likely to be forgetful. An ECS mandate from your bank to buy funds through the SIP mode is advisable. You have a reasonably good set of funds, though it does have a mid-cap bias. If your investment is for a period of over five years, you can skip investing in HDFC Balanced. Allocate the additional sum across these schemes itself.

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Published on December 21, 2014

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