I am 25. I have been investing ₹1,000 each in HDFC MidCap Opportunities and ICICI Pru Tax Plan and ₹5,000 in recurring deposit (RD) every month.

Apart from this, I plan to invest in a term insurance policy, ₹25,000 a year in PPF, ₹30,000 a year in RDs and ₹24,000 in tax saving schemes. Please guide me on fund choices.

Sarvesh Mahajan

It’s great that you have begun systematic investments this early in your career. Your plans to invest in term insurance and PPF too are good steps. But, for your age, you can invest far more in the equity markets than you are doing currently.

For this reason, we suggest you reduce the amount you are putting into recurring deposits, which yield lower returns and are not tax-efficient investments either. Shift the ₹5,000 you are investing in RD now into equity mutual funds.

That brings your total monthly SIPs to ₹7,000. Invest ₹3,500 in Axis Equity, ₹2,000 in Mirae India Asset Opportunities and ₹1,500 in HDFC Midcap Opportunities. For your ELSS fund, you can continue with ICICI Pru Tax Plan and park the sum that you had planned to earmark separately.

If you want an ELSS fund that is less risky, invest in Franklin India Taxshield instead. Note that if you run SIPs in ELSS funds, each instalment will be locked in for three years. Try to step up the sum you save over the years as your surplus increases.

I want to invest in mutual funds through the SIP route. I already have ₹2 lakh invested in mutual funds.

I would like to invest ₹17,000 till September 2021 (my retirement month) in these funds in the following proportion: 30 per cent each in Birla Sun Life Frontline Equity and Franklin India Prima Plus, 25 per cent in ICICI Prudential Banking and Financial Services, and 15 per cent in HDFC Midcap Opportunities. Kindly give your opinion.

Ravindar J

You are investing a sizeable sum of money; ₹17,000 invested each month for the next six years at an annual return of 12 per cent should give you around ₹17 lakh.

However, since you are nearing retirement, it is not advisable to take on higher risk closer to retirement.

Split the ₹17,000 you wish to invest as follows: put ₹4,500 each in UTI Equity and Axis Equity. Park ₹3,000 each in Franklin India Prima Plus and ICICI Pru Dynamic Fund, and the remaining ₹2000 in Tata Balanced fund. This way, your portfolio will have a mix of stable large-cap, multi-cap, and balanced funds. We hope you have enough debt investments such as FDs and provident fund.

I am 39 years old and working in an NBFC-MFI company at the managerial level. My son is two years old and I want to accumulate a sum of ₹80 lakh by the time he is 20. Presently, I have the capacity to invest ₹6,000-8,000 a month for a consecutive period of 15 years.

I have already planned for health and term covers. Please suggest appropriate schemes to achieve my targeted corpus. I have a medium risk appetite.

Ahongshangbam Budhachandra Singh

It’s terrific that you have thought out your target for your son’s needs this early. But unless you step up the amount you save each month, you are likely to find it hard to build up your intended sum.

If you invest ₹8,000 a month for the next 15 years, at a reasonable 12 per cent annual return, you will be able to accumulate only around ₹37 lakh. In order to reach ₹80 lakh, the return should be around 19 per cent annually, a tough task especially if you have a moderate risk appetite.

So try to increase the amount you save each month to at least ₹15,000 over time, which can help you reach your target with a moderate risk portfolio. For now, invest ₹3,000 each in Axis Equity and BNP Paribas Equity Fund, which are both geared towards large-cap stocks. Invest ₹2,000 in Franklin India High Growth Companies, a multi-cap fund which holds higher risk. As your monthly investment increases, you can add more funds.

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