(Photo: iStock)
(Photo: iStock)

Accumulated corpus in MFs can be used to repay outstanding home loan

  • Invest in a set of four to five good funds instead of having more portfolios
  • Keep tax saving funds together in one account

I am 31 years old and got married last year. I am planning to buy a house within the next year by taking loan of 30 lakh. I have a fixed deposit of 10 lakh which I intend to use to make the down payment. I also invest 11,000 every month in the following mutual funds: Birla Sun Life Frontline Equity, ICICI Banking and Financial Services, Tata India Tax Saving, ICICI Value Discovery, ICICI Prudential Balanced, Birla Sun Life Tax Relief 96, Birla Sun Life Small and Midcap fund, SBI Bluechip fund, SBI Magnum Balanced fund, DSP Black Rock Tax Saver fund, and Motilal Oswal Select Focus Multicap 35 fund. Most of the SIPs are of 1,000 a month and some are of 500. Is my portfolio on track or do I need to rejig it?

—Dev

If you continue investing 11,000 a month in a good mutual fund portfolio, and you keep paying your EMI in the meantime, it is likely that you will be able to accumulate the required corpus to repay and terminate your loan in about seven-eight years. By that time, your outstanding principle will likely be around 17-18 lakh, and your corpus, hopefully, will have grown to that amount. The advantage of your way of approaching this is that there is no hard deadline to make this happen, and it could happen a bit earlier or later depending on the markets.

Regarding your portfolio, there are too many funds for an investment of 11,000. I would recommend that you downsize it to a set of four to five good funds. There are several tax-saving funds in your list, keep just one of them (DSP fund would be a good choice). Among the others, you can keep the Birla Sun Life Frontline Equity fund, ICICI Prudential Value Discovery fund, Motilal Oswal Select Focus fund, and the balanced fund from ICICI Prudential.

Srikanth Meenakshi is co-founder and COO, FundsIndia.com. Queries and views at mintmoney@livemint.com

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