Vidya Bala, Co-Founder, PrimeInvestor.in replies: We hope you have been investing in the said equity funds long enough and did not enter recently. With just one more year to go, you should ideally be using the schemes you have held longer, for your goal in August 2022. Even if you invest Rs 15,000 per month for the next 12 months, your return expectation is well over 20%, which is no easy task to achieve. The sharp rally in recent times may give you the feeling that the market can deliver that kind of return. However, it would mean taking a significantly high amount of risk (and capital loss) to expect equities to deliver in one year. Hence, consider dipping into existing investments. Only FDs, liquid or ultra-short debt funds fit one-year time frame and not equity funds.
I am 27. I am investing Rs 2,000 in Mirae Asset Tax Saver Fund, Rs 1,000 in Parag Parikh Flexicap Fund, Rs 1,000 in Edelweiss Balanced Advantage Fund, Rs 500 in Axis Small Cap Fund and Rs 500 in Nippon India US Equity Opportunity Fund through SIPs every month. Are these good bets for the long term? I hope to earn 10% CAGR.
Rushabh Desai, AMFI registered mutual fund distributor replies: With your fund selection, allocation and with the combination of domestic and international equities I don’t see any problem in your portfolio generating 10% CAGR over the long term in good market conditions. Your portfolio may even earn more in good market conditions. You are investing 40% of your monthly portfolio corpus in Mirae Asset Tax Saver Fun. If the amount is for tax saving purpose then you can continue your SIP, but if not then I would recommend you stop your SIP and distribute that amount in a new flexi cap or focused fund and a mid-cap fund. Since you are an SIP investor it is very important for you to keep in mind that the exit point is more important than the entry point. Whenever you plan to redeem your corpus in the future do keep a buffer period for about a year or two at the end of your time frame and redeem your corpus in good/high market conditions to avoid any hit on your returns.
