Equity MF options for moderate and high-risk investors
Premium- When it comes to the portfolio, please have a large-cap index fund (UTI Nifty Index), a flexi-cap fund (Parag Parikh Flexi cap), and a hybrid fund (ICICI Prudential Balanced Advantage)
I am 40 years old and earn ₹70,000 a month. I have two daughters, aged 2 and 7. Please suggest some good mutual funds for investment to meet their education and marriage expenses, and the monthly SIP amount for this.
— Name withheld on request
With four upcoming long-term financial requirements, it is imperative that you start your investment journey right away.
You should invest as much as you can—with the thumb rule being that you should invest 20% of your monthly in-hand salary. That would come to ₹15,000 in your case. You can create two different portfolios—one for each daughter and invest ₹7,500 in a three-fund portfolio each. Such a portfolio could grow to ₹18 lakh in 10 years and ₹38 lakh in 15 years. They can be used fully or to supplement your education and wedding expenses.
When it comes to the portfolio, please have a large-cap index fund (UTI Nifty Index), a flexi-cap fund (Parag Parikh Flexi cap), and a hybrid fund (ICICI Prudential Balanced Advantage).
You can have the same funds in both portfolios, but keeping them distinct will allow you to keep track of each daughter’s requirement separately and plan your withdrawals appropriately.
I have been getting very poor returns from IDBI Equity Advantage, which I invested in six years ago. Should I exit the fund immediately and invest the proceeds in other funds?
— Name withheld on request
You’re right that the IDBI Fund has not done well during the course of your holding. It would be a good idea to switch out of that into better funds.
The fund you are holding presently is a moderate risk equity-oriented hybrid fund. If you want to keep your portfolio risk level moderate, you can consider moving to ICICI Prudential Balanced Advantage Fund. Else, if you are inclined towards higher risk, then consider a portfolio of Parag Parikh Flexi Cap Fund and SBI Small Cap Fund.
Srikanth Meenakshi is co-founder, PrimeInvestor