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Mutual Funds for SIP of 20 years

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  • The idea is to have the right blend across market capitalisation which helps generate good returns. It is good to diversify investment across large, large & mid-cap and flexi-cap funds. At the same time, investment portfolio should be diversified

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I am 20 years old and I want to do SIP for 20 years. Should I go for flexi-cap fund or bluechip, midcap and smallcap in equal proportions for SIP. Please suggest some mutual funds for SIP for 20-25 years.

Name withheld on request

Answer by Harshad Chetanwala, founder, Mywealthgrowth.com

It is very encouraging to read about your plans of investing for 20 years at this young age. Starting early will always work for you and help you build a good portfolio over years. You will be able to make the most of your investment when you assign a purpose and timeline to it. At this stage, you may consider wealth creation as your goal and may use the accumulated pool for different goals that may come up at a later stage.

As you have time at your side, you can afford to be a little aggressive in your approach to building your portfolio. The idea should be to create the right blend across market capitalisation which help you to generate good returns. It is good to diversify your investment across large, large & mid-cap and flexi-cap funds as you too plan to do it. At the same time, you should try to keep your investment portfolio well diversified by restricting allocation in a fund up to 15% at the time of investment.

You may consider investing in SIPs in the following funds keeping your long term horizon in mind. Any Nifty Index Fund (15%), Mirae Asset Large Cap Fund (15%), Parag Parikh Flexi Cap Fund (15%), UTI Flexi Cap Fund (15%), Canara Robeco Emerging Equities Fund (15%), Axis Midcap (15%) and Kotak Equity Opportunities Fund (10%). Alternatively, if you would like to have some allocation in international funds then you may replace Kotak Equity Opportunities with Motilal Oswal Nasdaq 100.

The time horizon is long term and you can review your investment every six months to check how your portfolio is progressing. Often by following a disciplined approach and remaining invested in the right funds for the long-term works well. Hence, it is not always necessary to rebalance or churn your portfolio during every review.

(Have personal finance queries? Send an email to mintmoney@livemint.com)

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