Praleen Bajpai, Founder, Finfix® Research & Analytics, replies, “Given your investment overview, the first thing you should do is find an amount equal to 12 months of expenses, which includes SIP, premium and Issue. This will be your emergency fund and will ensure that you do not need to dip into your other investments for contingencies. Additionally, keep some money for near-term expenses. Since monthly expenses and other details are not mentioned, set aside Rs 5 lakh from the maturity amount of Rs 20 lakh. This Rs 5 lakh can be invested in fixed deposits and debt mutual funds. The remaining Rs 15 lakh can be invested for your son’s education using equity mutual funds. The horizon is eight years. Divide the amount into three funds- a large-cap index fund, an aggressive hybrid equity fund and an international index fund. Assuming 9% CAGR, you will be able to generate around Rs.27 lakhs in the next seven years. Start moving the accumulated corpus closer to the target in debt funds. Assuming equal returns, a SIP of Rs 20,000 per month can generate around Rs 23 lakh during this period. However, if the SIP is continued for the next 20 years, you can build a retirement corpus of around Rs 1.72 crore assuming 11% CAGR.
I am 26 years old and earn Rs 27,000 per month. I want to start investing Rs 1,000 per month in mutual funds through SIP. Can you suggest some alternatives?
Rishabh Desai, AMFI Registered Mutual Fund Distributor Answers, “You can consider investing in Motilal Oswal Nifty 500 Index Fund and Motilal Oswal S&P 500 Index Fund. These funds invest in top 500 Indian and US companies, respectively, as per their market capitalization. This will help your portfolio both domestically and internationally. (US) markets. You can invest in these funds in equal proportion. Also, you must be clear about your investment objective. Investing in equities is a long-term process, minimum time for an equity SIP The investment horizon should be around 6-7 years and the ideal time horizon is around 9-10 years or more. Since you are young, you have enough time to compound your investments and if you do not have too many monetary responsibilities If you decide to increase your SIP amount, then along with the above mentioned funds you can consider starting two active funds from flexi cap and focused categories. You can check out Canara Robeco Flexi Cap Fund and Mirae Asset Focused Fund. Please keep in mind to keep a buffer period of around one or two years at the end of your investment time frame and redeem your investments during favorable market conditions to avoid any huge hit on your returns.”