I am 46 years old and my net income is 30,000. I invest 2,000 per month in five mutual funds (MFs): ICICI Infrastructure Fund, Reliance Growth Fund, Sundaram Select Mid-cap, DSP BlackRock Top 100, HDFC Top 200. In all the funds, I have taken the growth option. I invested a lump sum of 50,000 in each of the following funds in January—DSP BlackRock Top 100, HDFC Top 200, Sundaram Select Mid-cap, Reliance Regular Saving, Tata Equity P/E Fund. I expect a corpus of 25 lakh after 10 years for my daughter’s marriage and my retirement. Suggest if the choice of funds are okay to get the desired returns.

-Sanju Saralkar

With your monthly investment of 10,000, your portfolio would need to return 13% per year (compounded) for you to achieve this target. A reasonably well-designed MF portfolio would stand a good chance at achieving this rate of return if historical patterns continue. So even if you ignore your lump sum investments, just your systematic investment plan (SIP) should be able to get you to your goal as long as the portfolio manages a 13% compounded return.

Regarding your portfolio of SIP schemes, you are investing 40% in mid-cap-oriented funds, 40% in large-cap-oriented funds and 20% in an infrastructure fund. You can consider replacing one of the two mid-cap-oriented funds (Reliance and Sundaram) with a multi-cap fund that invests widely in all segments of the market. Quantum Long-term Equity and HDFC Equity funds are good choices for this purpose.

I have been investing in MFs since the last two years but looking at the current value of funds, I feel the returns are very poor. The funds are IDFC Premier Equity, HDFC Top 200 and DSP BlackRock Top 100. I see returns of 800 only on the total investment. For how long should I continue with the SIP to ensure that I get better returns?

-Snighdha Mohan

Once you start an SIP in MFs, the only reasons to stop the process or take out the money would be if you either need the money for expenses or if you feel there are better places to invest the money. Otherwise, systematic investing should continue regardless of what the overall market conditions are. The reason for this is that equity markets are hard to predict. You may choose to stay away when you think the markets are down, but if the markets make a sudden upswing, you will miss out on the opportunity. Also, the schemes that you are investing in are good, well managed and top-rated. I see no reason for you to stop the SIPs or to redeem your investment. Please continue with the plan as long as you can afford the instalments. However, do periodic reviews (once a year).

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