For creating reserves for your loved ones, you may invest in large and multicap funds via SIPs.
Query: I am 75 years old and can spare Rs 25,000 from my pension every month. I don’t want to put the money in fixed deposits as they come with lock-in periods or savings bank account. Please suggest where to invest this sum to earn returns that are better than savings bank.
Rahul Parikh CEO, Bajaj Capital replies:Future utilisation may be combination of personal emergency reserve (conservative approach) and passing wealth to your loved ones (aggressive approach). For emergency reserve, allocate some portion to fixed income oriented schemes. Short-term debt funds such as Franklin India ST Income Plan are a good option.
You may also opt for liquid funds. They provide instant redemption/withdrawal facility of up to Rs 50,000 per day. For creating reserves for your loved ones, you may invest in large and multicap funds via SIPs. You may choose from among UTI Value Opportunities, Motilal Oswal Multicap 35, SBI Bluechip and Aditya Birla Sun Life Frontline Equity. Being equity-oriented funds, they are subject to market fluctuations, but the SIP approach helps mitigate the impact of volatility. Equity funds’ returns over longer periods have beaten deposit returns, especially in case of SIP investments.
Query: I want to invest Rs 12,000 per month in tax saving equity schemes for eight years. Please suggest where to invest.
C.R. Chandrasekar CEO and Co-Founder, FundsIndia.com replies : You may consider investing Rs 8,000 in Franklin India Taxshield and Rs 4,000 in DSP BlackRock Taxsaver. Please note each monthly SIP instalment will have a lock-in of three years. It is advisable to stay invested even after the three-year lock-in period as equities help build a larger corpus over longer terms.
Query: I have started making monthly investments of Rs 15,000 each in SBI Small Cap Fund and Reliance Large Cap Fund; Rs 13,000 in Mirae Asset Emerging Bluechip Fund and Rs 1,000 in SBI Magnum Multicap Fund. Is my portfolio adequately diversified? Do I need to make any changes?
C.R. Chandrasekar CEO and Co-Founder, FundsIndia.com replies: Your exposure to the mid- and small-cap segment, via SBI Small Cap and Mirae Asset Emerging Bluechip, is quite high. Consider reducing investment in SBI Smallcap to Rs 5,000 and add the remaining Rs 10,000 to SBI Magnum Multicap instead. You also need debt to diversify from equity risks. Consider investing in a short-term debt fund when you have additional surplus.