I have a one-year-old daughter, whose education and marriage I want to start planning for now itself. I want to create a corpus of Rs 60-70 lakh for this over the next 20 years. I have already started one systematic investment plan (SIP) of Rs 3,000 with Reliance Regular Savings Equity Fund. I want to start another SIP of Rs 3,000 I am considering either IDFC Premier Equity Plan A or HDFC Balanced Fund. Which one should I choose?
-Prakash
The best way is to invest in mutual funds regularly through SIPs. If you regularly invest Rs 6,000 a month in mutual funds that earn an annual return of 15 per cent, you can build a corpus worth Rs 90 lakh over 20 years. Reliance Regular Savings Equity Fund is a foru-star rated multi-cap fund. It fared very well in the long-term. While IDFC Premier Equity Plan A, a five-star, mid- and small-cap fund, HDFC Balanced (four-star rated), is an equity-oriented hybrid one. As your goal is very far, you can think of investing in the mid- and small-cap fund, provided you understand the risk it carries, especially when compared to a balanced fund, wherein only 60 per cent of the fund invests in equities and rest in debt.
Do track your investments once a year to evaluate the progress and if there is any need for change your fund selection, as a fund that is good today may not be so forever. It will also be a good idea to move towards balanced funds closer to the year when you need this corpus, to check the portfolio from any shocks from equity market swings.
I am 35. I am investing Rs 1,000 through SIPs each in DSPBR Top 100, Franklin Templeton Blue Chip Fund, HDFC Top 100, HDFC Equity Fund and HDFC Prudence and Rs 2,000 in IDFC Premier Equity Fund. My goals are my daughter’s education and a retirement corpus. What is your view on my fund selection? Should I change any of these?
-Subhash
You have a good choice of highly rated funds. All these funds have a track record that demonstrates long-term performance, is in-line with your investment objective. Your portfolio has a large-cap growth style, which is good, with 89 per cent equity exposure and the rest in debt instruments, with investments in 131 stocks. The top stocks in which your fund has allocation are Infosys, ICICI Bank, SBI, Airtel and Reliance Industries.
If you make tangible goals such as needing a corpus of Rs 20 lakh for your daughter's education in 10 years and a corpus of Rs 90 lakh for retirement after 30 years, it will be easy to evaluate the portfolio's performance. You should also take care and track the performance of the funds you have selected at least once a year, to ascertain progress and any deviation. This way, you will be able to exit funds that are not performing and not lose on your financial goals.
I don’t have a demat account. Can I still invest online to buy and sell mutual funds?
-Ravinder Arya
You don’t necessarily need a demat account to start investing in mutual funds. You can start online either through an asset management company or through websites that support buying and selling of funds. These are all simple to use and also offer additional facilities through which you can view and analyse your fund holdings.
