Invest across categories and AMCs2 min read . Updated: 08 Jan 2020, 09:24 PM IST
- You are sufficiently exposed to the fixed-income category (you have PPF and insurance plans. So you can confidently increase your SIP exposure
- Funds in mid-cap and small-cap funds category need an investment period of at least 7-year for them to bear fruit in terms of good, market-beating returns
I’m 30 years old and I work in a PSU bank. My monthly take-home salary is ₹49,000. I have a systematic investment plan (SIP) in Aditya Birla Sun Life Tax Relief 96 ( ₹2,000), which I plan to increase by ₹1,000 every year. I also invest ₹5,000 in an insurance policy and ₹2,000 in Public Provident Fund (PPF). I have applied for a housing loan for ₹50 lakh. But I want to invest ₹2,000-3,000 in SIPs. Kindly suggest some schemes for high returns. I am a moderate risk-taker but I can invest in high-risk category as I am only 30 years old.
—Name withheld on request
It is good that you are planning to increase your SIP contribution and have also identified the risk potential that your portfolio can take (which is separate from your individual risk profile).
You are sufficiently exposed to the fixed-income category (you have PPF and insurance plans which are like fixed-income investments). So you can confidently increase your SIP exposure from the current levels. I am assuming that you are investing in the ABSL fund to avail of tax deduction. If so, please continue to the extent that the fund provides you such relief. For additional investments, you can go with relatively moderate-risk funds such as Mirae Asset Large Cap fund and ICICI Prudential Equity and Debt fund.
I invest ₹10,000 every month in L&T Midcap fund since around two-and-a-half years. However, since the last two years, I am not seeing any growth and getting negative returns. My horizon is 12-15 years. Should I invest in some other mutual fund?
I would answer your question in two parts—one, about this fund, and second about your investments in general. About this fund: it has not been giving good returns over the past several months, but it’s still doing better than many of its peers in the mid-cap category and the mid-cap index. Funds in this category (mid-cap and also small-cap funds) need an investment period of at least seven years for them to bear fruit in terms of good, market-beating returns. Given that your investment horizon is 12-15 years, you should not be worried about this performance blip. This holds true for equity investing in general, but definitely more for these categories of funds.
My second point would be about your overall portfolio. You have not indicated whether you are investing in any other funds or not. If this is the only fund in your portfolio, then you should definitely expand your investments to a wider range of categories and fund houses to mitigate your overall portfolio risk.
Srikanth Meenakshi is co-founder, PrimeInvestor.in. Send in your queries and views at firstname.lastname@example.org