I am 30 years old and about to be married. I am a seafarer by profession drawing about Rs12 lakh per annum. I have just started investing in mutual funds with SIP of Rs 5,000 each in PGIM India Flexi Cap, Mirae Asset Large Cap and Quant Active Fund. I also invested a lumpsum of Rs 50,000 in Quant Active Fund and another Rs 50,000 in HDFC Multi Cap Fund. I have a high risk appetite and want to accumulate Rs 2 crore for buying a house in the next three years. Am I on the right track?
Adhil Shetty CEO, BankBazaar replies, “Considering your monthly investments, budget and income, a Rs 2 crore house may be beyond your capacity in three years’ time. Currently, you are investing Rs 15,000 per month. Assuming a 15% CAGR, this will enable you to build a corpus of Rs 7 lakh in three years. Based on your current income, the average home loan you will be eligible for (considering your net salary) would be for Rs 48 lakh-60 lakh. So unless you have some other source of money, buying a Rs 2 crore house will not be possible in three years.
Also, equity investments are good longterm investments, but they are not the best option for the short term. Even a small upheaval in the market could wipe out your savings and leave you without funds at the time when you need it the most. So it is advisable that you start moving out your investments from equity to debt as you get closer to your goal. Typically, you should complete this in a phased manner a year before you need the corpus to maximise your gains and minimise risks.
You have invested in some good funds. Reevaluate your goals, increase your monthly investments, and build a bigger corpus that you can use to fund your house. Meanwhile, continue to build a good credit score and save up for other expenses and emergencies so that you do not have to dip into your savings for any reason.”
I am 27 and earning Rs 54,000 a month. I invest Rs 2,000 a month each in SBI Small Cap and HDFC Mid Cap Opportunities Fund and Rs 5,000 each in ABSL Tax Saver and Nippon India Tax Saver Fund. I want to purchase a house as soon as possible. I also have to fund two marriages in the family. Where else can I invest money through SIPS?
Rushabh Desai Founder, Rupee With Rushabh Investment Services replies, “You have mentioned your goals but not the corpus you require or your time horizon. You are saving and investing around 26% out of your monthly salary, which is a decent percentage. Since you have not mentioned your horizon and future value for your goals, the question is whether this figure is enough. Assuming 12% monthly SIP returns, Rs 14,000 invested per month for a period of 7, 10 and 15 years will yield around Rs 18.5 lakh, Rs 32.5 lakh and Rs 70.6 lakh respectively.
This is a rough estimate. I suggest you calculate on a goal-based SIP calculator available on various mutual fund websites for more clarity. Around 71% of your investments is in ELSS funds. Tax saver funds play a dual role of helping save tax and creating long-term wealth. If you are invested in these funds to save tax then you can continue to stay invested in this category. From the fund’s outperformance perspective, I would like you to stop additional purchases in Nippon India Tax Saver and HDFC Mid Cap Opportunities Fund. Instead you can look at investing in Mirae Tax Saver and Axis Mid Cap Fund. As you are investing for specific goals, keep in mind that investing in mid and small caps is very risky, as these segments can be very volatile. If you cannot stomach that, you can look at venturing into funds in the flexi cap and focused categories.”
I am 36 and recently started investing in equity. I hold 10 stocks worth Rs 1.22 lakh. I earned 35% returns from them. I have also started investing in mutual funds. How does one balance stock investments? Is Motilal Oswal S&P 500 a good fund? How many stocks do I need to hold in my portfolio?
Raj Khosla Founder and Managing Director, MyMoneyMantra.com replies, “Investment in direct equities work on ‘high risk – high return’ proposition. You should thus determine your risk and return appetite before investing in market linked options. As a first step, define your short, medium and long term goals. Accordingly determine asset allocation and diversify into various asset classes such as mutual fund SIPs, direct equity and debt funds. Motilal Oswal S&P 500 is a passive index fund— it replicates the S&P 500 index and moves with market trend. It is a safer option for a new stock investor. Last year was exceptionally good for equity and should not be considered as a benchmark. As a matter of fact, it really doesn’t matter how many stocks you hold as long as you are invested in a fundamentally strong stock. Do not rely on free market feedbacks for investment decisions. As for mutual fund investments, always opt for the SIP route which helps you create wealth in the long run, with minimum risk.”
