I am 29 years old and I want to start investing in mutual funds. I have investments only in fixed deposits (FDs) and recurring deposits (RDs). Can you suggest a few schemes to invest ₹10,000 every month? I don’t have any goals. Compared to FDs, how much money will I have in five or 10 years?
—Name withheld on request
It’s a great idea to get started with systematic investment plans (SIPs). This way, you would have the time to let the markets produce good compounded returns. To invest ₹10,000 a month, you can go with an aggressive portfolio of a variety of equity funds such as ICICI Prudential Bluechip, Mirae Asset Emerging Bluechip, Kotak Standard Multi-cap and SBI Small Cap. Don’t get fazed by market volatility; your portfolio’s value will not keep going up all the time like in an RD. The funds that I have recommended, when invested in equal portions, have had a blended return of more than 14% compounded over the past five years. That does not mean they will give the same exact returns over the next five years. But you can confidently expect them to do better than what a five-year deposit will give you today. Also, the tax treatment of your returns from this portfolio will be much better than that in FDs.
I have four financial goals (home, child’s education, car and retirement), and have invested in 11 schemes in total. I find it really hard to keep track of all the schemes. Can you suggest any online or offline methods to track my portfolio?
There are two parts to any such tracking requirement. One, to track the performance of individual funds, and two, to track how your portfolio is doing with regard to your financial goals. While there are several platforms that provide the ability for the former, there are few that do the latter. Also, as you transact on your funds and portfolio, it is difficult for such platforms to keep track of your holdings. The best way is to use a transaction platform that provides support for both—fund-wise tracking as well as goal-tracking. There are some platforms that do these, and a little research will lead you to them.
The simple offline method involves an Excel spreadsheet with a separate sheet for each goal. You can apportion each of your fund holding to a different goal, add them to the respective sheet, and update the value once a month. It’s manual work, but will help you visualize, track and be aware of how your investments are doing.
Srikanth Meenakshi is co-founder, PrimeInvestor.in.