I am 24 and earn ₹30,000 a month. I plan to buy a car in two years and an independent house in Bengaluru in seven-eight years. I have not invested in any funds yet. Kindly guide me on mutual fund investments to fulfil my goals and secure my future.

Shehnaz

It is good that you have started planning for goals early into your career. You have mentioned your salary, but have not stated the surplus that you generate. Assuming you can save ₹10,000, you can at best invest for the down payment of the two goals that you have stated and will have to take loans to fund the balance. But taking loans also means that EMIs would eat into your surplus.

For your short-term goal to save for a car, invest ₹5,000 every month. Park ₹2,500 each in HDFC Balanced and Tata Balanced. If you get 10 per cent returns, you will be able to generate ₹1.33 lakh in two years. This can be used for down payment of the car, which can be an entry-level basic model. From then on you will have an EMI for the auto loan.

Now, buying an independent house within Bengaluru city may be extremely challenging even if your salary grows exponentially in the next seven-eight years.

You could consider buying an apartment on the outskirts of Bengaluru or a plot outside the city. A plot in the outskirts is better as rates would be affordable. Also, you can build a house on the plot when you have the money and take a loan for it too.

Invest the balance ₹5,000 as follows: Park ₹2,500 each in Franklin India High Growth Companies and Birla Sun Life Top 100. These are multi- and large-cap funds, respectively, with strong track records. Invest for seven-eight years and save for the down payment for a plot. You will be able to accumulate ₹7.2 lakh over seven years if the funds deliver 14 per cent annual returns. Of course, you must buy plots from sellers who have all the legal documentation in place and the property should preferably be fenced.

As your surplus increases, invest more in funds so that you reach your goals faster.

I am a 31-year-old working professional and wish to start investing in mutual funds through the SIP route, though I know that it is a bit late to start. I can invest ₹10,000-15,000 every month. My friend has suggested L&T Equity, Birla Sun Life Frontline Equity, UTI Top 100, Franklin India Flexi Cap, Franklin India Smaller Companies and Mirae Asset Emerging Bluechip. Are these choices suitable for me? I am willing to take risk.

Shashikala Sharma

Though you could have begun earlier, starting off investments at 31 is certainly not that late. There is still considerable time for you to achieve your long-term goals. It would have been ideal to begin with a conservative portfolio. But given that you are open to taking risks, you can take some aggressive bets.

Your friend has suggested as many as six schemes for you, which may be too many. Of course, almost all the schemes are quality names. Split ₹15,000 as follows: Invest ₹4,000 each in L&T Equity and UTI Equity. These are quality large-cap funds with proven records. Park ₹3,500 in Mirae Asset India Opportunities, a quality multi-cap scheme. Invest the remaining ₹3,500 in Franklin India Smaller Companies. These schemes would give you a balanced portfolio across market caps.

As you gain confidence in investing, over time, you can add more schemes. You must have a 5-10-year timeframe for your funds to give meaningful capital appreciation and beat the indices and inflation convincingly.

Review the schemes in your portfolio once every year and take corrective action, if necessary, and rebalance.

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