I am 26 and work for a private company. I have been investing ₹3,500 in IDFC Premier Equity, ₹2,000 in L&T Equity and ₹1,000 in SBI Magnum Balanced via the SIP mode for the past two years. I wish to invest ₹4,000 more every month with an investment horizon of 10-15 years. Please suggest funds. Also, please review my existing holdings.

- Akshay Maslekar

Although you have done well by starting early on your investments, the choice of funds reflects no specific focus. With a 10-15 year timeframe, a balanced fund is not necessary unless you believe in a very conservative approach to accumulating a corpus. So, sell the units of SBI Magnum Balanced. In any case, there are better schemes in the balanced fund category.

You can also stop the SIP investment in L&T Equity, as it has not done as well as peers and has not been a top-quartile performer, though it does have a steady track record.

Split ₹10,500 (including the additional ₹4,000 that you wish to invest) as follows:

Invest ₹3,000 each in Quantum Long Term Equity and UTI Opportunities. These are quality large-cap oriented schemes with an excellent long-term track record. Park ₹2,500 in IDFC Premier Equity and the balance ₹2,000 in Franklin India Flexi Cap, a quality multi-cap scheme.

These schemes would give you a balanced portfolio with investments across market capitalisations. With your investment horizon, these schemes would give you a better chance to generate inflation-beating returns over the long-term. If you have low appetite for risk and want a balanced scheme in your portfolio, opt for ICICI Pru Balanced instead of Franklin India Flexi Cap.

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

I am 24. I would like to invest ₹2,000-3,000 a month for 10-15 years. Are there any chances of doubling the investment on maturity? My monthly investment might go up as my career advances. I have taken an education loan and a personal loan to support my family now. Please guide me on investing in mutual funds.

- Marshall

It makes very good sense to start investing early on in your career. You also have a long-term investment horizon that would give you sufficient time to achieve significant capital appreciation.

Except fixed return instruments, no other investment can assure you of a specific return over any period of time. So, there is no assurance that your money would double because no market-linked product can give definitive returns.

But as an indication, over the last 10 years, quality equity mutual funds have delivered 18-20 per cent annual returns. This may not be repeated in the future, but equity (including mutual funds) still remains the best bet to generate inflation-beating returns over the long-term, more so, on a post-tax basis. So, doubling investments in a 10-15 year timeframe appears eminently achievable. Try to repay the personal loan as early as possible as it involves paying a very high rate of interest and does not offer any tax exemptions either. It is assumed that the ₹2,000-3,000 that you wish to invest is the surplus that you are able to generate on a sustainable basis after paying your loan EMIs.

Since you have just started on mutual fund investments, begin by opting for large-cap schemes. If you are averse to risk, opt for a balanced scheme. As you become more comfortable with mutual fund investments and as your surplus increases, you can look at more diversification in your portfolio with additional schemes.

Invest ₹1,500 in ICICI Pru Focused Bluechip and ₹1,000 in Birla Sun Life Top 100.

These are large-cap funds with proven track records. If you wish to go slow, replace Birla Sun Life Top 100 with HDFC Balanced.

Over the long term, generating a corpus or saving for specific goals must be done with a balanced approach. This means investing in debt (FDs, PPF, NSC and RDs), gold and later on real estate, in a proportion that reflects your risk appetite and your available surplus. At this stage, you must have 70 per cent in equity (including mutual funds), reducing the proportion as you grow older. Take a term cover since you are servicing loans and a medical insurance policy.

Send your queries to >mf@thehindu.co.in

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