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Best mutual funds to create a retirement corpus in 25 years

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Last Updated: Jan 17, 2020, 12.18 PM IST
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I am trying to build my mutual fund portfolio to cover my expenses in the future. Please review my portfolio - it includes index funds, multi cap funds and large cap funds. I am planning to increase my investments by 6%.

For kids education
Total 4 mutual fund folios: 2 index funds and 2 multi cap funds.
Rs 5,000 per month in each. These are for 4 milestones which are 7, 9, 12 and 14 years from now. Risk profile for this goal is moderate.

For retirement
2 mutual fund folios : 1 large cap fund, 1 multi cap fund.
Rs 10,000 per month in each. This is to build Rs 7 crore corpus in 25 years. I just started investing in NPS (Rs 10,000 per month). Risk profile for this goal is aggressive.

Also please suggest about:
1. Best Mutual funds to invest in. (based on the parameters like alpha, AUM, sharpe ratio, etc)
2. Whether all the fund houses support the increase in SIP amount?
---Tilak

Ashish Modani, Founder, SLA Financial Solutions, responds:


There are some good and not so good part in your questions. Let me start with the good. Good part is that you are starting with a goal in mind and those goals are reasonably well defined (though they can still be defined better). You mentioned about the corpus for your kids' higher education and your retirement. However, you have not mentioned the requirements either in terms of the present cost or future cost. Also, you have mentioned the desired retirement portfolio.

The not-so good part is your desire to have the best mutual funds. When you are investing for multiple decades, it is not possible to predict which fund is going to be the best for so many years. No one can predict which scheme is going to be better or the best. One can surely say about schemes history and by looking at all its statistics like Alpha, Sharpe Ratio etc, but it will all say about its past and nothing about its future.

The best investors focus on what they can control, not what they cannot. They focus on asset allocation, not fund allocation. They know that their behaviour would be the decisive factor for their success over the long run. I would ask you to pick schemes with a consistent track record. You haven’t mentioned any schemes, so can’t comment on them.

Also Read

Your dad’s retirement corpus is not your mutual fund 'project'

Best mutual funds to build retirement corpus

Best SIPs to build a retirement corpus of Rs 3 crore

How can I build a larger retirement corpus?

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