I want to invest Rs 5,000 monthly via a systematic investment plan (SIP) in Reliance Growth, HDFC Top 200, HDFC Equity and Templeton India Growth. My investment horizon is 15 years. Will I be able to get Rs 2 crore?
-Sachin
You may expect an annual return of 10-12 per cent. By investing Rs 5,000 in each of the four funds, you would be able to generate a corpus of around Rs 1 crore in 15 years. So, to reach your goal you need to double your monthly investment amount.
All the funds mentioned are 4- or 5-star rated equity diversified funds. Remember that Templeton India Growth and Reliance Growth have a mid-cap tilt, too, which makes 50 per cent of your portfolio. Do not make your portfolio too aggressive and limit such funds to 20-25 per cent.
We are not aware about your other investments. But, you should have some amount of debt too, either as a debt fund or fixed return instruments. Decide on your debt:equity ratio and rejig the portfolio every year.
My investments in DSPBR TIGER Fund and Tata Infrastructure Fund are currently swimming in losses. Should I sell, even at a loss?
- Uday Kulkarni
Both are thematic funds, their mandate is to invest in infrastructure-related companies. So, their performance is directly linked to the fortunes of the sector. It makes for a risky investment option. Theme-based exposure comes with a lot of associated risk.
Risk can be minimised by ensuring these funds comprise upto 20 per cent of your portfolio.
Currently, these funds have a 3- and 4-star rating. In 2008 and 2009, both lagged their category average.
If these are the only funds in your portfolio, switch to equity diversified funds like HDFC Top 200, Magnum Contra and DSPBR Equity. But, if these are minuscule holdings in your portfolio, stay invested for some more time, till you break even.
I am a government employee and want to invest in a tax-saving mutual fund.
-Rahul
Choose any of the 4- or 5-star rated tax-saving fund such as Sundaram BNP Paribas Tax Saver, Magnum Taxgain or Canara Robeco Equity Tax Saver. But, note that they have a lock-in of three years and give a maximum tax deduction of up to Rs 1 lakh.
My dad retired in December 2009. Would a monthly income plan (MIP) be of any help to him? Do enlighten on any other plan?
- Hrishikesh A Morajkar
MIPs aim to provide a regular income by investing 80-90 per cent in debt and the balance in equity to help in capital appreciation. Though they attempt to give dividends every month, they do not guarantee it and nor can they assure you of capital safety.
A risk-averse investor who cannot bear any capital erosion or needs assured returns should avoid such investments. If your father is capable of undertaking some risks, then he can opt for an MIP like Birla Sun Life Monthly Income or HSBC MIP Regular. Only a small amount from the entire portfolio should be put into these plans.
If your father is 60 or above, then he may invest in Senior Citizens Savings Scheme and earn assured returns. With a maturity period of five years (extendible by another three years), he would be able to earn a fixed return of nine per cent per annum, compounded quarterly.
