I want to invest in mutual funds through the ‘direct’ mode without any intermediary, to save on charges. I have registered my KYC (know your customer) details with an agency and have also opened a demat account. I plan to invest ₹1,000 each in HDFC Balanced and Franklin India Smaller Companies through the SIP mode. Kindly let me know whether I can proceed with my choice of funds. Is it possible to invest directly, with the concerned fund house, online?

MK Nathan

It is good that you are aware of the direct mode of investing. You will save 50-75 basis points in charges by investing without intermediaries.

You have stated that you have opened a demat account. Now if you open a trading account also with some provider and buy funds through the account, it will not be considered direct investment and regular charges will apply.

Since you are just starting off, a balanced scheme and a large-cap fund such as UTI Equity is ideal. But if you can take risks, your choice of schemes seems fine.

Most fund houses these days allow you to invest online through their website.

Each time you want to invest in a different asset management company, you will need to submit the application with all supporting documents.

I am 35 and earn around ₹90,000 per month. I have a health insurance policy for ₹10 lakh.

I have invested in few shares and want to invest in mutual funds through a monthly SIP (systematic investment plan) for ₹16,000.

Please suggest at least three high-risk funds and one medium-risk scheme.

I want to generate ₹45-50 lakh over the long term.

I have a few fixed deposits for any emergency. Should I take an endowment policy or a term cover?

Amrut Mahabal Shetti

You have done well financially by taking a medical cover and setting aside sums for emergency needs. The next step would be to take a term cover, which must be for a sum that is 10 times your annual salary.

Endowment products deliver low returns and charges are high. They are best avoided.

Coming to your query on mutual fund investments, you look set to achieve your target corpus. If you invest ₹16,000 every month for 12 years and the schemes deliver 12 per cent annually, you will reach the goal of around ₹50 lakh comfortably at the end of the period without taking high risks to achieve this return.

Of course, if you want to achieve your target a bit earlier and can take more risks, an aggressive portfolio can be suggested.

Split ₹16,000 as follows: invest ₹4,000 each in Birla Sun Life Top 100 and L&T Equity. These are predominantly large-cap schemes with proven records.

Park ₹4,000 each in Franklin India High Growth and Mirae Asset Emerging Bluechip. The former is a multi-cap scheme while the latter is a mid-cap fund. Both have excellent performance records over the past four-five years.

If you want more risks, replace Birla Sun Life Top 100 with ICICI Pru Value Discovery, a mid-cap scheme which has delivered very well over the years and generally takes bets anchored in valuations.

Review the schemes in your portfolio once every year. Weed out underperformers and rebalance, when necessary.

I just started my career and want to create a corpus of ₹20 lakh in the next 10 years. I can allocate ₹10,000 every month. Please suggest a suitable plan.

Padmini

You appear to be comfortably placed to realise your desired goal. If you invest ₹10,000 every month for a period of 10 years and generate returns of 12 per cent, you will be able to accumulate a little over ₹23 lakh. Since you are just starting off and have moderate return expectation, a relatively safe portfolio is being suggested. Invest ₹3,000 each in ICICI Pru Focused Bluechip and Franklin India Prima Plus.

Park ₹2,000 each in HDFC Balanced and Mirae Asset India Opportunities. These schemes will give you access to stocks across market caps.

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