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An SIP Expectation

While investing in equity funds, expect to earn more than what some other instruments offer

I want to start an systematic investment plan (SIP) worth Rs 2,000 on a monthly basis and continue it till five years. After that I should get Rs 2 lakh. Which fund should I invest in? Axis MF has come out with some new funds. Should I invest in them?

It is very reasonable to expect Rs 2 lakh from an investment stretched across five years. If you invest in the market and everything goes well, you should look at a better return. If you invested the money in the Post Office, you get an eight per cent return from a recurring deposit. As such, expectations from investments in the markets should be anywhere around 12 per cent. 

You should choose a good balanced fund and consistently invest Rs 2,000 in it, whatever the market situation.

Talking about Axis MF, it is a new fund house and the advise always is to go for a proven fund with a good track record. We are not saying Axis funds are bad, maybe they are good, but we do not know anything much about them, as yet.

Will the political turmoil in the country affect the stock markets?

When such a situation arises, the decision-making process comes to a halt and the markets do not really like such situations. But the present poor political situation is restricted to only one state and the government should not be affected due it. It is a local issue as of now and it should not have any affect on the market.

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