I am 38 and want to invest ₹20,000 every month for the next 13 years in mutual funds through the SIP route. I wish to accumulate ₹90 lakh to ₹1 crore for my child’s higher education and my retirement needs.

I have short-listed the following funds: UTI Equity - ₹5,000; Quantum Long Term Equity - ₹4,000; Birla Sun Life Frontline Equity - ₹3,000; ICICI Prudential Value Discovery - ₹5,000; Reliance Equity Opportunities - ₹3,000 or HDFC Midcap Opportunities - ₹3,000.

Are my choices good? Also, should I invest in the regular or the direct option?

- Shantanu

You have planned well for your future goals. The execution is the most critical part. To reach the goal of ₹90 lakh to ₹1 crore in 13 years, the returns annually need to be 15 per cent, which may not be easy to achieve over such a period of time.

If you increase your time horizon by another year and invest ₹20,000 every month over the next 14 years, you can accumulate ₹94 lakh, if returns are a reasonable 13 per cent.

Alternately, you can increase your investment steadily over the years as you generate a higher surplus so that you reach your goal within 13 years.

The funds you have chosen have proven long-term track records. But you can change the allocation to schemes. Invest ₹4,500 each in UTI Equity, Quantum Long Term Equity and Birla Sun Life Frontline Equity. Park ₹3,250 each in ICICI Pru Value Discovery and HDFC Midcap Opportunities. You can choose HDFC Midcap Opportunities over Reliance Equity Opportunities as the former, a pure mid-cap fund, has a stronger track record over the long term.

Review the schemes’ performance once every year and take corrective action, if necessary. Over the long term, invest in debt (FDs, RDs, tax-free bonds and FMPs), gold and real estate so that you have a balanced portfolio. Book profits or exit units and move to safer debt investments if you reach your target ahead of time.

You can choose the direct option if you can review your portfolio yourself and can handle the paperwork with multiple fund houses. The charges are much lower compared with the regular plan.

I have been investing ₹6,000 each in the following funds through monthly SIPs for the past three years: Franklin India Bluechip, HDFC Equity, IDFC Premier Equity and Reliance Equity Opportunities. My goals are still 8-10 years away.

All these schemes were top-rated three years ago, though now some of them have fallen behind. Should I change the schemes in my portfolio? I also invest ₹50,000 annually in PPF.

- Ram

You have done the right thing by investing for the long term and choosing the mutual fund route to reach your goals. Make a habit of reviewing your portfolio at least once every year and take corrective action by exiting prolonged underperformers.

Of course, while doing this, you must also take into account the market conditions and the performance of peer funds over the same period of observation.

For the ₹24,000 you are investing, you can afford to have five-six schemes in your portfolio, not just four. Franklin India Bluechip has a proven long-term track record. But over the past few years, it has lagged top peers in its category by a substantial margin. The case is similar with IDFC Premier Equity. So, stop further investments in these two schemes.

Now, split ₹24,000 as follows: invest ₹5,000 each in HDFC Equity, ICICI Pru Top 100 and Birla Sun Life Frontline Equity. These are predominantly large-cap funds with excellent long-term track records.

Park ₹4,500 in Reliance Equity Opportunities, which is a multi-cap scheme. The balance ₹4,500 can be invested in Axis Midcap. This allocation will create a balanced portfolio of funds for you.

It is nice to note that you are investing ₹50,000 in PPF. This way you will have a robust debt portfolio as well. In future, try to diversify with investments in gold and real estate. Have a financial target in mind, book profits and move over to safe debt avenues if you reach your target ahead of time.

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

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