Want to invest in mutual funds but don’t know how to go about it?
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Get all your mutual fund related queries answered by our expert, Manoj Nagpal, managing director and chief executive officer, Outlook Asia Capital, on our show Mutual Fund Corner.
Q: 31-year-old Pushpendra Mahajan writes us from Pune. My son is 1-year-old now. I want to create wealth of Rs 1.5-2 crore for my kid's education. My investment horizon is 18-20 years.
With this objective, I have started SIP of Rs 2,000 each in five funds: ICICI Pru BlueChip Fund, Kotak Standard MultiCap Fund, Mirae Asset Emerging BlueChip Fund, Reliance Small Cap Fund and L&T Emerging Business Fund. All are growth options.
I am investing from last three months. Please judge whether fund selection and allocation is proper. If any changes needed in fund, please suggest. I am willing to increase SIP as my income increases.
A: Most investors do an equal allocation to mutual funds. A 20 year time frame with a specific corpus/goal requirement needs more thought. First 10 years, there should be higher risk profile and in the second 10 year period, the risk profile should be reduced.
For the first 10 years, you can run a portfolio of only three funds Reliance Small Cap, Mirae Emerging BlueChip and Kotak Standard MultiCap with an allocation of 30 percent, 40 percent and 30 percent. In the next 10 years, you can add funds like ICICI Pru BlueChip and Kotak Contra. In this period, stop the SIP (i.e. incremental flows) in the earlier funds and add to these new funds.
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