Please suggest the best investment option—stocks or mutual funds? Which are the top mutual funds and which of them have options of switching from debt to equity and back when the market fluctuates?
It all depends on your investment capacity and your ability to take risk. Stock market investments could be more rewarding but at the same time they carry a lot of risk. Mutual fund investments are also rewarding but have lesser risk compared with the direct investment in stocks as they are managed by professionals. If your risk-taking capacity is low, then debt-based mutual funds or direct investment in debt instruments is a good idea.
As far as top mutual funds are concerned, the list is separate for separate categories. Regarding your question of switching from debt to equity, these concepts are more common in the case of unit-linked insurance schemes, because in the case of direct investment in mutual funds you always have the option of selling them and buying something else any time you want.
I’m looking to invest in mutual funds for a period of five years.
As mentioned earlier, an ideal portfolio could be designed only in case you define your risk profile and time horizon properly and make investment decisions accordingly. You mentioned your time horizon, but you did not mention your risk capacity so in the absence of this information it would be difficult to answer your query optimally.
However, assuming you are an average risk taker, I would suggest 65% investment in equity-based mutual funds and 35% investment in debt-related schemes.
I plan to start a 12-month SIP (systematic investment plan) in funds indicated in the attachment. Is it a good time to start SIP? I plan to invest a total of Rs25 lakh over a year and wish to stay invested for five-seven years.
Your choice of portfolio mentioned in the attachment along with your mail is very good. However, the number of schemes is fairly large. Still, considering the strength and weakness of your portfolio I would suggest that you consider UTI Banking Sector Fund in your portfolio. If you don’t wish to enlarge your portfolio then drop HDFC Prudence Fund in favour of this scheme.
Regarding your question about the right time to invest, I would say that though there may not be a bull run in the short term, if you increase your investment horizon through SIPs to two years, then it would be better.
Answers are based on a technical analysis of the markets and individual stocks. The views expressed on this page are not the newspaper’s opinion and are provided for information purposes by Vipul Verma. Readers are requested to do their own research before participating in the stock markets. Neither the paper nor the information provider will be responsible for any outcome based on information provided here.
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