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Business News/ Money / Calculators/  Have an equity-oriented portfolio for long-term goals
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Have an equity-oriented portfolio for long-term goals

Constituents of your portfolio would be determined by number of years you have to reach your goal

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I want to start investing in mutual funds (MFs) through systematic investment plans (SIPs). I am 30 years old and can invest 50,000 per month. I have a long-term view and moderate risk capacity.

—Rakesh K. Karn

As a young person with many years of earning, saving, and investing to look forward to, you are in a great position to have a well-planned financial future. The sum that you are planning to invest on a monthly basis is a significant amount, and you could create more than one portfolio with it.

The way to do it would be to look ahead in your life and identify the situations when you are likely to require significant amounts of money. Retirement, although a couple of decades away, is always something to save for, and the earlier you start doing it, the better.

If you have or plan to have children, saving for their future expenses should be considered as financial goals. If you have medium-term goals, such as buying a house, they should be factored in as well.

Once you have such a list of known goals, then you should create specific portfolios that are geared towards achieving each one.

The constituents of each such portfolio (the actual MF schemes) would be determined by the number of years you have to reach them.

The further the goal, the more equity-oriented the portfolio would be, with the rest of the allocation going to debt, or as you see fit, and in gold.

For example, you could structure your monthly investment of 50,000 into four different portfolios. One for retirement, a very long-term portfolio with 80-90% of the allocation to equity funds. Two portfolios each for education needs in, say, 12 years, that would have significant equity allocation but also some debt and gold allocations (totalling about 30%, for example). The last portfolio could be a medium-term portfolio that would address an expenditure that is three to five years away and which would be light on equity and heavy on debt investments.

You can choose the actual schemes to invest in such portfolios from the schemes in Mint50 list, Mint’s chosen set of 50 MF schemes .

This would be the proper way to approach your investment choices. If you find the process difficult to understand and/or execute, you should consider consulting with a financial planner who can structure your portfolios in a way that best suits your financial needs.

Queries and views at mintmoney@livemint.com

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Published: 28 Mar 2014, 06:42 PM IST
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