I want to enter the markets and have made some choices about funds which I intend to buy into. These are DSPBR Growth, HDFC Top 200, ICICI Prudential Discovery, Sundaram BNP Tax Saver and Reliance Regular Savings.
Your primary selection is good, but since you are just getting started, it would be good to understand these funds, what they stand for – you don’t to be surprised wit anything at the wrong time. For Example, DSPBR Growth and HDFC Top 200 are excellent funds. They are well diversified with no specific focus and they have been able to tide over bad patches in the market very well. They have also undergone a very smart recovery in a rising market. So they could well be a core holding of an equity portfolio.
Then you have to ask a question: Do you really need a tax saving fund, as such a fund would come with a three-year lock-in period. ICICI Prudential Discovery is dominantly invested in mid- and small-cap stocks, which lends a great deal of volatility to the fund and for somebody who is getting started, if the markets are in a declining phase, then you might get a big jolt.
Being a student, a mature investor, or an old investor does not matter. What matters is how much time you have for your investment and for what period you won’t need this money. For instance, an investment in ICICI Prudential Discovery should be for a longer time frame.
You should avoid the tax saving fund because it is an unnecessary constraint and you would have an inability to get out of it if you want to.
Also, investing regularly is very important to understand how an investment really works. Do not invest a lump sum, invest regularly in select funds to begin with.