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A mutual fund portfolio to invest Rs 50,000 monthly

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Last Updated: May 22, 2020, 12.29 PM IST
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I am beginner in the field of mutual fund investments. I want to invest around Rs 50,000 monthly in mutual funds via sip. I can add Rs 5,000 every year to this amount. I can afford moderate risk and my goals are for 5, 10, 15, 20 and 30 years, and the requirements are for house, children's education and retirement.

Me and my wife are government servants. We have our NPS. Our current age is 30 and 27.

I want to earn 12-13% return on my investment. Based on my profile, please suggest a portfolio of mutual funds. Please guide me and if you want to know anything else, please let me know.
-Sumit Saini


You have started your investment journey in the right manner: identifying goals. The next step is to find out how much money you need to achieve each of these goals, and include annual inflation to arrive at a realistic target for your long-term goals.

For example, a college education costs Rs 10 lakh now. It will cost around Rs 31.72 lakh after 15 years, accounting for an annual education inflation of 8%. Once you know your target corpus, you can calculate how much you need to invest every month to create it. In this case, assuming an annual return of 12%, you need to invest around Rs 6,287 every month to create a corpus of Rs 31.72 lakh in 15 years.

Remember, these are rough calculations. Ideally, you should stop investing in equity and transfer your investments at least two to three years before your actual goal. You can hire a fee-only financial planner to prepare a financial plan for you if you think the process is too cumbersome.

The next step is to choose mutual funds that are in line with your goal, time horizon, and the risk profile. For example, if you have a conservative risk profile, you can choose aggressive hybrid schemes or large cap mutual fund schemes for your long-term goals that are five to seven years away. Similarly, a moderate investor may choose multi cap mutual fund schemes. Aggressive investors can choose mid or small cap schemes if they have a very long-term investment horizon of at least seven to 10 years.

Since you have mentioned that your risk profile is moderate, you may invest mostly in multi cap mutual funds for your long-term goals. However, you should reassess your risk profile (take an online quiz if needed) to ensure that you indeed have the risk appetite to invest in multi cap mutual funds. Many newcomers do not understand the difference between ability to take the risk and willingness to take it. The difference is very crucial.

As a rule, stick to bank deposits and debt mutual funds to achieve your short-term goals that need to me before five years.

Mutual funds do not guarantee any returns. Many mutual fund advisors believe you can assume an annual return of 12% from your equity investments over a long period.

You should consult a financial planner if you want a financial plan. Since you are new to mutual funds, you should seek the help of a mutual fund advisor before proceeding. You should gain some experience and knowledge before taking care of your investments on your own. It is not easy to keep track of your investments, assess their performances on a regular basis, and take remedial steps whenever required. New investors often find it too much to handle.


(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)
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