Saving for the long term

By Morningstar |  11-07-18 | 
 

I am 31 years old. Married. No kids as of now.

  • Goals: Kids education, Retirement, purchase a house in 5-10 years (I stay on rent).
  • Monthly net salary: Rs 1.2 lakh
  • Investments:
  • PPF (Rs 12 lakh)
  • EPF (Rs 8 lakhs)
  • NPS (Rs 1 lakh)
  • MF - Mirae Asset Bluechip (Rs 1 lakh)
  • MF – SBI Magnum (Rs 50,000)
  • MF - PPFAS Long Term Equity (Rs 24,000)
  • Cash - Rs 2-3 lakhs in my bank account
  • Stocks – Rs 8 lakhs

Can you advise me where specifically to invest Rs 5 lakh which I have; which mutual funds?

- Mandeep

While constructing a portfolio, the asset allocation mix is the very first step. This is where you decide how much goes into various asset classes such as equity, debt, gold and so on and so forth. This is considered as one of the key determinants of the portfolio’s performance and also helps to balance risk.

A suitable asset allocation is typically based on one’s investment horizon, risk appetite and investment goal. Generally, longer the investment horizon and higher the risk appetite, higher would be the allocation to equity. For example, if the investment horizon is 10 years or above and risk profile is Aggressive, then 70% to 80% of your investment portfolio could be allocated to equity and 20% to 30% to debt. Hence, it is advisable that you consult a financial adviser to ascertain your risk profile, based on your risk tolerance and risk-taking ability, and the appropriate asset allocation that suit your requirements.

You mentioned a few funds, but you did not mention whether you have ongoing SIPs in any of them.

Our analysts have not looked at PPFAS Long Term Equity Fund, but we have spoken to the fund manager at length. You can read his views here.

Our analyst shares her views on Mirae Asset Emerging Bluechip. You can read them here. This is a good fund with a Silver rating.

You mentioned SBI Magnum, but there are numerous funds which sport that name – SBI Magnum Midcap, SBI Magnum Taxgain and SBI Magnum Global, for instance.

When selecting funds, it is advisable to consider their performance over at least the previous three years to five years. This along with studying calendar-wise performance vis-à-vis benchmark indices (like Sensex, Nifty, etc.) and peer group would indicate consistency across time frames and market cycles. Additionally, you could consider the fund’s AUM (AUM should be greater than Rs 500 crore.) and period of existence (longer the better).

Do take a look at these tools when evaluating performance.

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SHASHI PAL
Jul 15 2018 11:07 AM
HALLO SIR I AM PLANNING TO INVEST IN MUTUAL FUNDS FOR 10 TO 12 YEARS OF MIN AMOUNT RS 10000/ PL SUGGEST ME TO SUITABLE FUNDS TO INVEST IN SIP.
I HAVE CHOSEN SOME FUNDS PL HAVE A LOOK ON THESE FUNDS ALSO:

1 Mirae Asset Emerging Bluechip Fund - Direct Plan (G)
2 Kotak Standard Multicap Fund - Direct Plan (G)
3 Motilal Oswal Multicap 35 Fund - Direct Plan (G)
4 HDFC Small Cap Fund - Direct Plan (G)
5 L&T Midcap Fund - Direct Plan (G)
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