I plan to invest Rs2,500 for 15 years in six mutual fund (MF) schemes: HDFC Equity Fund, DSP Black Rock Top 100 Equity, IDFC Premier Equity Fund Plan A, Birla Sun Life 95 Fund, Reliance Regular Saving Fund Balanced Plan, HDFC Top 200. Are my choices okay? If I stick to these funds and invest through a systematic investment plan (SIP) for 10-15 years, how will my funds grow? What is the corpus I can expect after 10-15 years?
The keys to a good portfolio are matching the asset allocation to the timeline of the investments, diversification, and scheme selection. In your case, given a 10-15 years time frame, you have chosen an aggressive asset allocation. Your portfolio is in the 85:15 (approximately) ratio between equity and debt (debt component at present being in balanced schemes). Within equity, your allocation ratio is 75:25 between large-cap-oriented funds and small/mid-cap-oriented funds. So, overall you have 65% of your portfolio in large-caps, 20% in small/mid-caps, and 15% in debt instruments. That represents an aggressive, well-diversified portfolio. The schemes you have chosen are good and well rated.
It would be reasonable (but not guaranteed) to assume a 14% long-term return from such an aggressive portfolio in 10-15 years. In case your time frame is 10 years, you would have to invest Rs18 lakh and your investment would grow to around Rs37 lakh. In 15 years, the numbers would be Rs27 lakh and Rs84 lakh, respectively.
I want to invest Rs2,000 per month through a SIP in diversified MFs for five years. Which funds should I go for?
MF schemes that invest in large- and mid-cap companies would be best suited for your purposes. These schemes invest mostly in bellwether stocks, but take some exposure to new mid-cap firms as well. Fidelity Equity and Birla Sun Life Frontline Equity Plan are good.
However, remember that our recommendations are made with the best research and performance data available as of today. Any multi-year systematic investment portfolio should be reviewed annually to ensure that the selected schemes are still top in the category chosen.
I am investing in the market for the first time (I have fixed and recurring deposits). Please give some valuable advice on SIPs and related investments.
Since you already have investments in debt products in the form of fixed and recurring deposits, you can use MF investments to solely add the equity component to your portfolio. For a beginner, entering equity investment is best done through an SIP in broadly diversified multi-cap schemes. HDFC Equity and Reliance Regular Savings–Equity are good starter funds in this category.
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