I am 29 years old and have one dependent (wife). I plan to invest equal amounts in five mutual funds via SIPs.
Equity Diversified - HDFC Top 200, DSPBR Equity, Magnum Contra
Tax Saver - Sundaram BNP Paribas Taxsaver/ Magnum Taxgain
Aggresive Fund - Reliance Growth
Will this be a good portfolio for long term investments? I also plan to add Kotak Flexi Debt next year for balancing purposes.
- Indranil Dutta
For any long term portfolio, well rated diversified equity funds with a proven track record should form the core. You have already taken care of this in your planned portfolio. These funds might not give the chart topping returns in a bull run, but will also limit the downside risk in a falling market.
When you invest equal amounts in each of the five funds, the investment in Reliance Growth, an aggressive fund will be 20 per cent of your monthly investments. This fund is riskier than a diversified large cap offering and you should keep an eye over its allocation and not let it form a substantial part of your total portfolio.
The debt fund will serve as a cushion against the vagaries of the equity markets. It will also come handy in periodic rebalancing of the portfolio. Allocate about 15 - 20 per cent of your portfolio to it.
All the funds that you have chosen have proven track records and you should go ahead with them. Five equity funds will give you all the necessary diversification. But take care not to increase the number of funds in the portfolio to keep it easily manageable.
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