I am 54 years old and have been investing in mutual funds through a monthly systematic investment plan (SIP) of Rs10,000. I started investing three years ago. Now I want to invest the lump sum I got from this SIP. Is it safe to invest in one go or should I opt for an SIP?
Since you have been investing systematically over the last three years, you probably have a corpus of about Rs4-5 lakh—reflecting a 15-16% compounded annual growth rate. That is a better rate of return than what you would have got if you had invested all the money in one go three years ago. That is because the rupee-cost averaging lowered your average cost of entry into the market over a period of time.
Do not change your method of investment just because you have a lump sum to invest. Put your money in liquid funds of one or more fund houses and set up systematic transfers to equity or equity-oriented balanced funds over a period of time. You can select good top-rated funds from the Mint50 list depending on your time frame.
My salary is Rs16,000 per month and I save Rs5,000 monthly. I have two SIPs from UTI Mutual Fund for five years at Rs1,000 per month. I want to invest in more SIPs. Please suggest some funds.
We would need to know the specific schemes in UTI Mutual Fund that you are investing in to provide specific advice. Also, an idea about your age or the time frame of your investment will be useful to suggest a portfolio. We can only provide general guidelines for an SIP portfolio design. Ensure that the portfolio is well diversified across market capitalizations with an allocation of at least 50% to large-cap-oriented funds. Stick to the Mint50 list of funds for your scheme choices. Finally, though your investment tenor is five years, review your portfolio annually.
I am 26 years old and single. I plan to invest in the following funds: HDFC Top 200, Reliance Regular Savings Equity, DSP BlackRock Equity and Birla Sun Life Dividend Yield Plus. How much investment in these funds will help me build a corpus of Rs2.5 crore in 30 years?
To accumulate a corpus of Rs2.5 crore in 30 years, you will need to invest about Rs4,500 per month for this period (assuming a long-term return of 15%). However, you need to understand that Rs2.5 crore in 30 years will roughly be equal to about Rs25 lakh today (assuming long-term inflation rate of 8%).
For a very long tenor such as yours, it is imperative to have allocation in the small and mid-cap sector. You can consider replacing DSP BlackRock Equity and/or the Birla Sun Life Dividend Yield Plus with DSP BlackRock Small and Mid Cap fund and Birla Sun Life Midcap Plan A, respectively, for this reason.
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