I am 27. I have been investing ₹3,000 in HDFC Midcap Opportunities, ₹2,000 in Franklin Bluechip, ₹2,000 in Franklin Prima Plus and ₹2,000 in Franklin Flexi Cap. I have also invested in SBI Emerging Businesses Fund. I would like to increase my systematic investment plan (SIP) amount. Kindly suggest some funds and let me know if any changes are required in the schemes that I currently hold.

- Anup P Sakhala

Although you have done the right thing by investing in mutual funds, there are multiple flaws in your scheme choices.

One, you have chosen three schemes from the same fund house, denying you the benefit of the investing styles of different fund houses. There would also be considerable portfolio overlap. Two, there is no focus in the way you have bought into various funds. Three, for the amount you are investing, three schemes would suffice.

Retain HDFC Mid-cap Opportunities and invest ₹3,000 in it. You can stop SIPs in Franklin India Bluechip, as the scheme has underperformed in recent years. Instead, invest ₹3,000 in ICICI Pru Focused Bluechip, a large-cap fund with a solid track record.

Finally, the toss-up is between Franklin India Prima Plus and Franklin India Flexicap. The former has a track record of nearly 20 years and is predominantly large-cap oriented. Franklin Flexi-cap too has a good track record, though it does take significant mid-cap bets.

If you can take more risks, opt for Franklin India Flexi-cap. Else, go with Franklin India Prima Plus and park ₹3,000 in it. Retain SBI Emerging Businesses, but don’t add to it.

You can split the increased amount that you wish to park each month equally among the three schemes mentioned above.

I am 36 and want to invest ₹8,000 every month through SIPs. My time horizon is eight to ten years, over which I wish to accumulate ₹30 lakh. Am I on the right track. Also, if I accrue a good return after three years, should I book profits at that time or keep on investing till the end, ignoring all the gains in between?

The schemes I intend to invest in are as follows: ₹2,000 in IDFC Premier Equity Fund and ₹1,000 each in UTI Mastershare, UTI Opportunities, Birla SL Frontline Equity, Franklin India Bluechip, ICICI Pru Dynamic Plan, and HDFC Equity.

- Namgyal

The financial target that you have set is challenging. If you invest ₹8,000 every month for 10 years, the annual returns must be 20 per cent for you to be able to reach ₹30 lakh. A more realistic time horizon would be 13 years, with a return assumption of 12 per cent. Coming to your portfolio, you have chosen as many as seven schemes for the ₹8,000, when three would suffice. Split ₹8,000 as follows: invest ₹3,000 each in Birla Sun Life Frontline Equity and UTI Opportunities, large-cap oriented funds with a proven record. Park the remaining ₹2,000 in IDFC Premier Equity. You can give the other schemes a miss.

Now, if you make extraordinary gains in certain years, you can consider partially booking profits, depending on your risk appetite and need for cash. If you have a long-term horizon and high risk appetite with no short-term need for cash, you can allow the fund returns to compound.

I am 39. I want to start an SIP to fund my daughter’s education. She is six years old now. Please suggest the best schemes.

- P Sivakumar

Given that it would be another 10 years before your daughter starts college, there is sufficient time for you to derive meaningful capital appreciation.

As education is a non-negotiable goal, a relatively moderate risk portfolio would be appropriate. You must have a target corpus in mind, which will make the job of saving and booking profits easier. Get a grip on the current education costs and factor in inflation to arrive at a target. Annual inflation has averaged 9-10 per cent.

Invest in ICICI Pru Focused Bluechip and Quantum Long Term Equity, two proven large-cap performers. You can also invest in HDFC Children’s Gift Fund – Investment Plan, a quality balanced fund. If you reach your targeted corpus ahead of time, book profits or exit units and move the proceeds to safer options. Invest in RDs as well to create a cushion and bridge any shortfall.

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