I plan to purchase a house worth 50 lakh after 10 years for which I am willing to invest 10,000 every month. My current portfolio consists ICICI Prudential Bluechip Equity, UTI Unit-linked Insurance Plan, Birla Sun Life Dividend Yield Plus ( 2,000 per month in each) and HDFC Top 200 ( 1,000 per month). Please suggest where to invest the remaining 3,000.

—Abhinov Kumar Gupta

If you invest 10,000 a month for 10 years, you will have invested 12 lakh and you can expect to have around 23-26 lakh (depending on the market) at the end of the tenor. If your target is 50 lakh to buy a house, you need to save and invest about twice of what you are now. Of course, you can avail a home loan for the remaining.

Having said this, the expected returns from your portfolio will depend on the nature of your investments and schemes. You are investing in two large-cap-oriented funds, a small- and mid-cap fund and a debt-oriented hybrid fund. From among these, the last fund—the debt-oriented hybrid—is out of place since it invests 60% of its portfolio in the debt market. You can replace it with another fund from the UTI stable—UTI Opportunities, which is another large-cap-oriented fund. If you are adding 3,000 to this portfolio, you can do so without adding any more funds. You can simply add 1,500 to HDFC Top 200 and spread the rest among the other three funds equally. When done, your portfolio will have 25% in a pure large-cap fund, 50% in two large- and mid-cap funds, and 25% in a small- and mid-cap fund. This portfolio, if maintained for the long term, will take you as close as possible to your target.

I have 1 lakh that I want to invest for a period of one year. Apart from this, I will also like to start a systematic investment plan (SIP) of 10,000 starting next month for the long term. I can take moderate risk.

—Shekar

You want to invest 1 lakh for one year. Whether or not you are going to redeem the money within a year or after a year will have a bearing on where you can invest it. In either case, your investments should be in debt funds. So, if you plan to stay invested for at least one full year, you can consider investing in debt-oriented hybrid schemes. These funds invest a small portion of their portfolio in equity market to potentially give slightly higher returns to investors. If your investment time frame is less than 12 months, however, it would be better to stay invested in short-term debt funds.

For SIP portfolio, you can consider a combination of large-cap and balanced funds. Splitting your investment between a couple of large-cap-oriented funds such as HDFC Sensex Plus and Quantum Long Term Equity and a couple of balanced funds such as HDFC Balanced and Birla Sun Life ’95 in equal proportions should do well.

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