I have been investing through SIPs in the following schemes for the past one year: Birla Sun Life Dividend Yield Plus Rs 8,000, IDFC Premier Equity Plan B Rs 6,000 and ICICI Pru Focussed Blue Chip Equity Rs 5,000. Please let me know if the above funds are good. I wish to remain invested for a 10-year period. Let me know if any change of funds is necessary. I find that you have not recommended Birla Sun Life Dividend Yield Plus whose performance appears to be exceptional right from its inception.

Raju

It is nice to note that you have given yourself a long time horizon of 10 years for your investments to ripen. But there seems to be no specified goal or corpus size towards which you wish to save. This is important in deciding your time and investment avenue. Another point to be noted is that you are investing as much as Rs 19,000 in SIPs. So you can add at least another couple of funds for such a sizeable monthly investment.

Good picks

The funds you hold have a fairly impressive track record over the past 3 to 4 years. But the amounts parked in each of them are on the high side. Also, your portfolio is tilted towards mid-cap funds and can lead to increased volatility in returns.

Invest Rs 3,000 each in the three funds you already hold. Add HDFC Top 200 to the portfolio and invest Rs 5,000 in it. Park the balance Rs 4,000 in Canara Robeco Equity Diversified. This portfolio will give you a blend of large-, mid- and multi-cap funds. Review your portfolio periodically to weed out underperformers and rebalance.

Coming to your query on Birla Sun Life Dividend Yield Plus, we have indeed recommended the fund many times. We may not have specifically suggested the fund in this column as each portfolio is unique and needs to be treated accordingly to incorporate the risk-returns expectations of a particular reader.

That said, we have not asked any of the readers to exit the fund if already held. The fund definitely has had a good run. But we want to be cautious on two counts: one on whether the ‘dividend yield' theme will continue to pay off going forward and, two, whether the fund's mid-cap concentration can lead to volatility in returns.

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I am 38 years old and work in a public sector company. I want to invest Rs 10,000 in mutual funds for the long term (20 years). They are for my son's education, marriage and for my retirement. I am new to mutual funds. So I request you to suggest how many funds I can hold through SIPs. How much will I be able to accumulate if I invest this amount for 20 years?

Sriram

Your time horizon is a very long one for wealth accumulation. If you are able to invest Rs 10,000 every month for a period of 20 years, you will be able to accumulate over Rs 1 crore, if the portfolio earns 12.5 per cent per annum.

And if the funds manage to deliver 15 per cent (challenging over a 20 year period), you can even amass Rs 1.5 crore.

Segregate goals

You have not stated the age of your son or when he would go for higher studies or marry. So it would be difficult to design a plan for the goals. But you would do well to segregate your goals according to timelines and save for each goal separately. That will mean allocating different amounts in various funds with varying timelines.

Since you are new to mutual funds, we suggest you go for less-aggressive funds with a steady track record over the long term. Invest Rs 3,000 each in HDFC Top 200 and Quantum Long-term Equity. Invest Rs 2,000 each in IDFC Premier Equity and HDFC Prudence.

Now, as and when you have a higher surplus, you can invest in HDFC Children's Gift Fund – Investment Plan. This fund is specifically meant for investment in the name of minors till they turn adults. It has an exceptional track record of delivering steady returns.

For your retirement, along with equity, you must invest in debt instruments, gold and, if possible, real estate for a balanced portfolio. Review the performance of your funds at least once a year. At least six months to a year before your target date, move your funds to safer avenues, such as bank deposits.

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