I am 28 years old and I want to build a corpus of ₹1 crore in the next 20 years. My appetite for risk is moderate and I’ve a few systematic investment plans (SIPs). These include ₹5,000 in Axis Bluechip, ₹3,000 in ICICI Prudential Equity and Debt, ₹2,000 in Mirae Asset Emerging Bluechip and ₹2,000 in HDFC Small Cap. I plan to add another ₹2,000 every month. Should I add a tax saver scheme to my portfolio? Also,is my current portfolio good enough to meet my goal?
Investing ₹12,000 a month for 20 years will get you to your goal of ₹1 crore quite comfortably—even if we assume an 11% annualized return over this period. Adding another ₹2,000 would make it even more comfortable to reach your target. However, you need to consider the fact that ₹1 crore in 20 years would not be worth as much as it is worth today. Assuming a long-term inflation of 6% over this period, ₹1 crore then would be the equivalent of ₹ 31 lakh today. If you would really like to have the equivalent of ₹1 crore in today’s terms, you would need to aim for ₹3.2 crore in 20 years. And that would, in turn, mean that you would need to increase your SIP investments to ₹35,000 per month. My advice would be to invest as much as you can every month and increase the amount by 10-25% every year.
In terms of schemes, the funds in your portfolio are fine, with a good distribution across categories. You could add a tax-saving fund to the mix, especially if you can use the deduction from Section 80C. Else, you could add a mid-cap fund such as L&T Midcap or a small-cap fund such as Franklin India Smaller Companies. For a tax-saving fund, you could go with Invesco India Tax Plan.
Srikanth Meenakshi is co-founder and chief operating officer, FundsIndia.com.
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