I have systematic investment plans (SIPs) of 1,000 per month in HDFC Top 200 and SBI Magnum Tax Gain. Are these good for 15-20 years? What kind of returns can I expect? I am also considering ICICI Prudential Discovery fund. Is it good?

—Abhishek Singh

The keys to long-term wealth accumulation using a MF portfolio are good asset allocation plan and top-rated schemes. For a very long time frame, it would be difficult to pick three schemes today and say that those are going to be good after 15 years. The schemes that you have chosen are reasonably good at this time. However, you should review your portfolio periodically (at least once a year) to see if they continue to remain well-performing.

One of your schemes is a tax-saving scheme. Since it will lose its tax advantage once the Direct Taxes Code comes into effect, you should move to another scheme at that time, while keeping within your asset allocation framework. You can expect 12-15% long-term returns from a diversified equity portfolio.

I have been investing in Reliance Growth, Reliance RSF-Equity, HDFC Equity, DSP Equity, Sundaram Smile, DSP Mid Cap, DSP Micro Cap, Franklin Pharma, ICICI Prudential Power, Reliance Banking and IDFC Premier Equity through SIPs. The corpus is 5 lakh. Should I rejig my portfolio to accumulate 2 crore after 12-13 years?

—Sandeep

In order to achieve a 2 crore corpus in 12 years, you would need to invest about 58,000 every month for this period (assuming a 14% compounded annual growth rate, or CAGR).

Assuming uniform investments across the schemes you have listed, you have 35% of your portfolio in large-cap-oriented schemes, 35% in small/mid-cap schemes and 30% in sectoral schemes. I would advise you to increase your large-cap investment by reducing allocation to sectoral schemes. Also, reduce the number of schemes to 6-7. Please use Mint 50 to choose top-rated schemes.

Can a grandparent make payment through his bank account related to SIP, not exceeding 50,000, in favour of his grandchild? Which funds would be good for 10 years?

—V. Mahadevan

Yes, a grandparent can pay from his bank account for SIP investments in the name of his grandchild, provided the grandchild is a minor. Recently, the Securities and Exchange Board of India (Sebi) implemented a restriction on third-party payments for investments but this restriction provides for an exemption for family members funding investments for minors. However, the grandparent needs to submit a declaration about the relationship and need to be compliant to know-your-customer norms at the time of SIP registration. Reliance Regular Savings Equity Gr and Quantum Long-term Equity Gr are good choices for a long-term investment horizon.

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