I am 31 years old. I wish to accumulate a corpus of ₹80 lakh, 20 years from now.

I can take moderately high risk.

I plan to start a SIP of ₹8,500 per month, as follows: Franklin High Growth Companies - ₹3,000; Axis Long-Term Equity - ₹3,000 and Mirae Emerging Bluechip - ₹2,500.

Kindly review my fund selection. Should I consider a dedicated large-cap fund in my portfolio?

Saurabh

If you invest ₹8,500 a month for 20 years and your funds earn a compounded annual return of a reasonable 12 per cent, you will get a corpus of ₹85 lakh.

While this is higher than the ₹80 lakh you are aiming for, keep in mind that the value of ₹80 lakh, 20 years down the line, will not be the same as it is today.

Hence, you can step up your investments as and when your earnings and surplus increase over the years.

This will also help in planning for multiple financial goals as you progress in life, such as building a house, funding a child’s education or taking care of your retirement needs.

It is true that we normally suggest a large-cap-oriented fund as part of a core portfolio.

This is because these funds generally are adept at containing losses in falling and volatile markets and provide stable, if not top-of-the-class, returns. This will suit those with lower risk appetites.

But in your case, your choice of a mid-cap fund in Mirae Emerging Bluechip, a multi-cap fund in Franklin High Growth Companies, along with a tax-saving scheme in Axis Long-Term Equity, matches your risk appetite.

Besides, you are young and have a 20-year time frame in mind.

Hence, although mid-cap or multi-cap funds tend to go through more ups and downs than large-cap funds, they may provide higher long-term returns.

If you do want a large-cap-oriented fund for stability, you can perhaps add one when your surplus increases and when you decide to step up your monthly investments.

Since you are investing with a long time frame in mind, remember to periodically monitor the funds and replace prolonged underperformers.

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