Am I investing in right mutual funds?

I am 38 years old. I want to invest for 20 years. I started investing in mutual funds three months ago. I am investing for my child's education and marriage. My risk profile is aggressive. I am investing in the following mutual funds through SIPs:

• Parag Parikh Flexi Cap Fund: Rs 5,000
• Axis Bluechip Fund: Rs 2,000
• Axis Small Cap Fund: Rs 1,000
• Am I going in the right direction?

-Vertika Srivastava

You have chosen good mutual fund schemes. However, your selection is not as per your stated risk profile. For example, flexi cap funds are recommended to moderate equity investors. Large cap schemes are meant for conservative investors. Small cap schemes are recommended to very aggressive investors. It is not clear your rationale for the fund selection. Ensure that you are okay with these schemes.

You should adopt a goal-based investing strategy. Find out the current cost of the goal, provide for inflation to find out the future value of goals. Once you know your target corpus, you can find out how much you need to invest every month to achieve the corpus.

For example, you need a college fund of Rs 50 lakh in today’s value. Assuming an annual inflation of 6%, the same goal would cost around Rs 1.6 crore after 20 years. You need to invest around Rs 16,000 to create a corpus of Rs 1.6 crore in 20 years. We are assuming an annual return of 12% for calculation.