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For your SIPs, split the amount you have to invest in the following manner: 20% each in Kotak Standard Multicap and Mirae Asset India Large Cap, 10% in UTI Nifty Next 50. (iStockphoto)
For your SIPs, split the amount you have to invest in the following manner: 20% each in Kotak Standard Multicap and Mirae Asset India Large Cap, 10% in UTI Nifty Next 50. (iStockphoto)

Split your emergency corpus between FDs and liquid funds

I have investments in Franklin Templeton Ultra Short Bond Fund and Franklin Templeton Short Term Income, which were shut down in April

I have investments in Franklin Templeton Ultra Short Bond Fund and Franklin Templeton Short Term Income, which were shut down in April. My agent in April had said that the money will come by October. What is a realistic deadline by which I can get my money back? I have withdrawn from another debt fund that I had and kept the money in a fixed deposit for emergency corpus. Should I avoid debt funds for parking emergency corpus?

—Sabina Goel

Your agent should not have given you any such date. It isn’t possible to give any deadline on when proceeds from Franklin Templeton’s debt funds that were shut down will come in. There are several aspects involved. One of them is legal proceedings; while the Karnataka high court has issued a judgment, the fund house may appeal certain aspects of the verdict. Even without the legal proceedings, there is no clarity on how long the funds will take to liquidate their portfolios to return the proceeds to the investor.

For emergency corpus, hold at least half of this in bank fixed deposits (FDs). The rest can be held in liquid or overnight funds. Credit risk is not an issue in these funds. Pick liquid funds with large fund houses. You can also use very short-term funds such as money market funds or ultra short-term funds, but ensure that they have no credit risk.

I am looking to invest for my daughter’s marriage, which is still 10-15 years away. My goal is to save 25 lakh for this goal and my risk appetite is low. Please suggest some schemes, where I can invest some money as lump sum ( 1 lakh) and schemes where I can start systematic investment plans (SIPs).

—Vidhya

For your SIPs, split the amount you have to invest in the following manner: 20% each in Kotak Standard Multicap and Mirae Asset India Large Cap, 10% in UTI Nifty Next 50. This amounts to 50% of the SIP, and forms the equity allocation and is predominantly large-cap. The Nifty Next 50 is an index that delivers high returns but is also volatile and riskier. Therefore, the exposure suggested is low—this will allow you to earn a bit higher return without too much risk. The remaining 50% can be invested in debt; here, invest 25% each in Kotak Corporate Bond and IDFC Bond – Short Term. You can split the initial 1 lakh investment equally between these two debt funds.

I am 22 years old and have started SIPs in the following plans: 5,000 each in ICICI Prudential Pharma Healthcare and Diagnostics Fund Direct Growth; and 2,000 each in SBI Small Cap Fund Direct Growth-2,000 and Mirae Asset Emerging Blue Chip Fund Direct Growth. My risk profile is aggressive. I have chosen these funds to create a substantial corpus in 10 to 15 years. Are these schemes okay? What corpus can I expect after the above period? Do I need to increase, decrease or alter SIPs in any of the funds?

—Bhawin Parmar

While you may have an aggressive risk appetite, you still need to balance different types of funds in your portfolio. When small-caps or mid-caps fall, they can do so very sharply and will take far longer than large-caps to recoup lost ground. When you have an entire portfolio in aggressive funds, it opens it up to high volatility. In the long term, lower volatility delivers better return. You also have the bulk of your SIP in a sector fund. This needs timing entry and exit. Reduce the SIP in this fund to 2,000 and instead start an SIP in a Nifty 100 index fund with the remaining 3,000. This will introduce some stability in your portfolio returns. Keep track of the pharma fund’s return and book profits when you see that returns have started slowing. Continue with the other SIPs as both of them are quality and consistent performers.

It is hard to predict what your corpus can grow to, as markets change over time. You can use online calculators and an assumed rate of return to get an idea of what your investment may become. However, if you are saving towards a goal, keep track of performance and invest more if returns are lower than expectations.

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

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