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Invest in hybrid funds for moderate risk

  • Once you have reached your home buying goal, start on your long-term retirement and wealth-building goals with an aggressive portfolio
  •  I would recommend that you invest in a set of hybrid equity funds such as HDFC Hybrid equity and ICICI Prudential equity and debt funds

I have SIPs in Mirae Asset Emerging Bluechip ( 1,250), Kotak Select Focus ( 1,000), DSP TaxSaver ( 1,000), DSP Natural Resources and New Energy ( 500), Aditya Birla Tax Relief 96 ( 2,750) and Reliance Tax Saver ( 500). I want to save 1.5 lakh-2 lakh in two years for my child’s school admission. My long-term goal is wealth creation with moderate risk. I want to accumulate 20 lakh in five years to buy a flat. I can invest 12,500 per month for that. Please advise.

—Vishal Shrivastav

You are presently investing 7,500 in an assortment of mutual fund schemes, some of which are meant to save tax. Assuming they help you meet your tax-saving goals with respect to the 1.5 lakh limit under Section 80C, you can continue doing so. Continue investing in Mirae Asset and Kotak funds. The non-tax saving scheme from DSP can be redirected and added to the Mirae Asset fund. The proceeds from this portfolio should hopefully enable you to meet your child’s school admission expense.

However, for your other goal of getting to 20 lakh in five years, you would need to save and invest 26,000 a month (assuming a medium-term annualized return of 10%) for the next five years. Given that this is a medium-term goal, you cannot afford to take too much risk. I would recommend that you invest in a set of hybrid equity funds such as HDFC Hybrid equity and ICICI Prudential equity and debt funds. You can start with 12,500 and either add on to it as time goes by or take a loan at the end to bridge the gap, or both.

Once you have reached your home buying goal, start on your long-term retirement and wealth-building goals with an aggressive portfolio.

Srikanth Meenakshi is co-founder and chief operating officer, FundsIndia.com.

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