Premium| Listen to this article |
I am 28 years old and have systematic investment plans (SIPs) in one ELSS fund and one flexi cap fund. I wish to start a SIP in one more mutual fund (open to more than one, if required for diversification). I am investing for wealth creation as I don’t have any financial goals right now. I have an investment horizon of 15-20 years and a high-risk appetite. What funds do you suggest?
— Name withheld on request
Let me assume that you have equal amounts of money in the two funds that you are presently investing in (50:50 allocation). You are investing in two broadly diversified funds—the ELSS fund is also, typically, a fund that invests across market segments. It would be good to add an index fund that invests in the large-cap segment of the market.
The Axis Nifty 100 fund would be a good choice here. As you identify yourself as a high-risk person with a very long investment horizon, you can also add a small-cap fund to the equation in the form of an SBI Small Cap Fund. Over a period of time, you can also add an overseas fund, one that invests in the US S&P 500 to add further diversity and growth opportunities to your portfolio.
I need to increase my monthly ELSS investment by ₹3,000 to exhaust the 80C limit. Should I increase the SIP amount in my existing ELSS fund, which is Axis Long Term Equity Fund (investing ₹7,500 monthly in it), or pick a new fund, and why?
— Name withheld on request
When it comes to equity investing, it is always good to diversify into more than one fund, especially in a category like ELSS funds where the fund manager has a lot of discretion to invest anywhere in the market.
By diversifying, you will be able to tap into multiple fund management styles and reduce the risk of your overall portfolio. So, in your case, please add a fund such as the Mirae Asset Tax saver fund to your portfolio.
Srikanth Meenakshi is co-founder at PrimeInvestor.in