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 (Photo: iStock)
(Photo: iStock)

At age 26, tax-saving MFs can be a major part of 80C investments

  • Make sure the tax-saving investment is required for your purposes
  • Continue to retain your bluechip fund investment

I am 26 years old and will be earning around 55,000 a month from August. I plan to invest 20,000 a month in mutual funds. I would like to have a diversified portfolio and have already invested 90,000 in SBI Bluechip Growth fund. I also recently started a systematic investment plan (SIP) in L&T Midcap and Tata India Tax Savings funds. All the SIPs are of 1,000 a month. Should I continue with these funds? Also, please suggest other funds to invest in and the respective amounts to be invested through SIP.

—Monil Shah

You are planning to invest about 36% of your monthly income systematically in a mutual fund portfolio. At your age, that’s a great way to start your investment path in life.

At present, you are investing 2,000 in two funds. However, the sum of money you are planning to invest is significantly larger than the current amount and, hence,you would do well with a fully designed portfolio.

You can continue with these two funds. However, make sure that the tax-saving investment is required for your purposes and saves a meaningful amount in the form of Section 80C deductions. You can also continue to retain your bluechip fund investment.

Apart from continuing the funds you already have, you can add a few others to your portfolio. A large-cap fund in the form of ICICI Prudential Nifty Next 50, a diversified fund in the form of PPFAS Long Term equity fund, and a small-cap fund in HDFC Small cap fund would be good additions. You can also add to your investment in L&T Mid-cap fund. Together these funds would give you a well-diversified financial portfolio.

Given your age, I have made it a 100% equity, highly aggressive portfolio for the long term. Persist with your systematic investment plan (SIPs) through times tough and easy, and this set of funds will provide you good returns over the long term.

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

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