I am 24. I have started investing ₹2,000 per month in Canara Robeco Equity Diversified fund. I have also invested ₹25,000 in Axis Long-Term Equity (ELSS). I am investing ₹3,000 per month in PPF. I was investing ₹4,000 per month in a bank Recurring Deposit which I now intend to shift to two funds at ₹2,000 each — SBI Small & Midcap and Canara Robeco Emerging Equities. I want to make additional investment of ₹2,000 in a large-cap oriented fund. I want to make a saving of ₹10 lakh in the next four years. Kindly advise.    

Yashvir Bhadu

Including your existing investments in Canara Robeco Equity Diversified and three other funds you want to start SIPs in, you are currently looking at investing ₹8,000 per month in mutual funds.

Assuming that your investments give a compounded annual return of 15 per cent per annum over the next four years, you might be able to get a corpus of ₹5.28 lakh at the end of the four-year period. Of course, given your fund choices, you may get higher returns if the equity markets shine in the next four years and mid and small-cap funds do better than large-caps. Your other investments may come in handy to bridge some of the shortfall too.

But this is an ideal scenario. In reality, since market movements are not predictable, a short investment horizon of four years pegs up the risk substantially.

Besides, you may also not be able to cash in on your other investments fully as there are restrictions on PPF withdrawals. There is also a three-year lock-in for investments in equity-linked savings schemes, if you decide to invest more in tax-saving funds.

If you don’t have any pressing financial obligations to be met four years hence, you can look at a longer investment horizon and ₹8,000 can be split among three funds — Kotak Select Focus (₹3,000), Franklin Flexi Cap (₹3,000) and Canara Robeco Emerging Equities (₹2,000).

Kindly suggest three good ELSS schemes to save tax under 80C. I have moderate risk appetite and can wait three years more beyond the lock-in period. I am 62, in good health, and have no liabilities.

Debashis Chatterjee

Even though you have stated that you have no liabilities and can take risk, you have a limited time horizon of six years in mind.

Being a senior citizen, you can consider safer options such as the post-office Senior Citizen Savings Scheme or tax-saving deposits from banks, which offer higher rates for seniors. These options are available for a five-year investment period, which is also close to the time horizon you have in mind. More importantly, they score high on capital preservation. Yet, if you do want the adrenaline rush of investing in the stock markets, divide your tax-saving investments among these three options instead of investing the entire sum in ELSS schemes.

Choose Franklin Taxshield. It consistently invests in large-cap stocks to the tune of 80-85 per cent of its portfolio and has a commendable track record.

I have been investing ₹4,000 in Franklin India Prima Plus, ₹5,000 in ICICI Prudential Value Discovery and ₹5,000 in IDFC Premier Equity through SIPs for the last six months. I want to increase the SIP amount to ₹15,000. My risk appetite is high and I want to invest for the long term. Please review my portfolio.

Aditya

You have chosen well to invest in Franklin Prima Plus and ICICI Pru Value Discovery. You can add HDFC Mid-cap Opportunities and UTI Equity to your portfolio and split ₹15,000 as follows — ₹5,000 in Franklin Prima Plus (large-cap oriented), ₹4,000 in UTI Equity (large-cap oriented) and ₹3,000 each in Pru Value Discovery (multi-cap) and HDFC Mid-cap Opportunities (mid-cap).

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