In every ET Wealth edition, our panel of experts answers questions related to any aspect of personal finance. If you have a query, mail it to us right away at etwealth@timesgroup.com.
I am 22 and earn Rs 70,000 per month. My goal is to save Rs 60-75 lakh in the next 6-7 years for higher studies. I currently invest Rs 15,000 per month through SIPs with Rs 4,000 in Parag Parikh Flexi Cap Fund; Rs 3,000 each in SBI Small Cap, Axis Small Cap, and Mirae Asset Emerging Bluechip; and Rs 2,000 in Tata Digital India Fund. I am planning to start an SIP of Rs 2,000 each in Nippon India Nifty 50 Bees, Nippon India Junior Bees, and Motilal Oswal NASDAQ 100 ETF. I can invest Rs 40,000-50,000 per month. What can I do to achieve my investment goal (ideally adjusted for inflation)?
Vidya Bala, Co-Founder, PrimeInvestor.in replies, “If you invest about Rs 50,000 a month, and your investment earns 11% IRR you will have about Rs 63 lakh at the end of seven years. Returns may vary depending on market conditions. So it is better to keep return expectations tempered. Increase SIPs when your savings go up. Your fund choices are fine, but they are quite aggressive. Also, there are no debt funds. We hope you have PF or FD investments. Consider having just one of the two smallcaps and add more to Nippon India Nifty Bees. Let Nifty account for at least 30% of your portfolio with the theme fund and international fund at not more than 10% and 15% maximum. Mid, large and mid and small-cap funds together can make up maximum of 25-30%. Rest can be Junior Bees and flexi-cap funds. International ETF price may be erratic now owing to inflow restrictions by RBI.”
I am 33 and earn Rs 90,000 a month. Where can I invest Rs 20,000 every month for a long-term goal? I have a high-risk appetite. I can increase the investment amount by Rs 10,000 every year. I already have an emergency corpus.
Dev Ashish, Founder, StableInvestor and Sebi-registered investment advisor replies: Good to know that you already have an emergency fund. With every passing year, increase this buffer to keep it in sync with your growing expenses. For a monthly Rs 20,000 investment, you can consider two or three equity funds. Later, as your investment amount increases, you can introduce new funds into the mix. To start with, choose from the following combinations: Rs 10,000 each in one large-cap index fund and one flexicap or large and mid-cap fund. Or you can go with Rs 10,000 in one large-cap index/active fund and Rs 5,000 each in one large and mid-cap or mid-cap fund and one small-cap fund. You might be tempted to add more, but my recommendation is that since you are just starting the accumulation phase, begin with a few funds only. In fact, just having two index funds focused on Nifty50/Sensex and Nifty Next50 would be a good option too. Also, many investors want to have international exposure. If you too feel so, then simply pick a US-based index fund. I have assumed that your tax savings are already handled via your EPF/PPF contributions and hence, have not suggested any ELSS funds. Also, assess how much you need to invest for your important goals like children’s higher education, retirement, etc. (or take the help of an investment adviser). That is because just investing X amount every month may not be enough to achieve all your goals in time. Find out how much needs to be invested, and then begin investing that amount.
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