I am a pensioner and want to invest Rs 3,000 per month for the long term for my grandchildren. Please suggest where to invest.
Naveen Kukreja, CEO and Co-founder, Paisabazaar replies, "You may invest in large-cap
mutual funds, given that they are less risky compared to mid- and small-cap funds. You may invest in the following schemes: ICICI Prudential Bluechip, Aditya Birla Sun life Frontline Equity and Franklin India Bluechip. Make sure you stay invested for at least 8-10 years to gain from the
power of compounding. Also, invest in the
direct plans of the chosen funds as these have lower expense ratios compared to their regular counterparts."
I am 34 and want to invest a lump sum of Rs 20 lakh in mutual funds for the long term. Please suggest schemes.
Adhil Shetty, CEO, BankBazaar replies, "Only if you have high risk tolerance should you opt for lump sum investment in equity funds. It is advisable to invest through systematic transfer plans instead. Split your corpus among liquid funds, fixed deposits, or both, and then transfer it gradually from to equity funds. You may split the Rs 20 lakh among three funds—Franklin India Liquid, ABSL Liquid, Reliance Liquid—and then shift Rs 1 lakh every month into your preferred equity or balanced funds. Do not invest everything into one fund or category. Diversify your portfolio to reduce the risk further. Allocate a part of your investment to
debt funds, government securities, as well as schemes like the
PPF. Since you are investing for the long term, monitor your investments regularly and correct your course as and when required. As your retirement nears, shift from equity to debt instruments. Do this in a structured manner and redeem investments that you may need for short-term expenses while remaining invested in other products to gain from compounding."