I am 30 years old and I want to invest for more than 10 years. I have recently started monthly systematic investment plans (SIPs) in the following funds (see table):
I aim to accumulate around Rs 20 lakh in 10 years. Are these good funds? - Joe
To achieve the target of accumulating Rs 20 lakh in 10 years, you need to invest Rs 8,608 monthly for the next 10 years. Your present monthly investment of Rs 5,000 will generate merely Rs 11.6 lakh. For these calculations we have made the rather conservative assumption that your investments will earn an annualised return of 12 per cent.
Next, let us evaluate the funds that you have invested in. One flaw that we can spot right away is that all your funds belong to the same fund house - DSP BlackRock. This is not a smart move as it creates concentration risk within your portfolio. In developing the ideal portfolio you should diversify across sectors, market capitalisation and fund houses.
As for the individual funds, DSPBR Equity is a good multi-cap fund. You may retain it in your portfolio while increasing your SIP in it to Rs 3,500. The other two funds are mid- and small-cap funds. In the mid- and small-cap space, we suggest that you go for one of the better alternatives such as Birla Sun Life Dividend Yield Plus, Sundaram BNP Paribas Select Midcap Reg or IDFC Premier Equity Plan A. Just two funds should suffice for a total monthly SIP of Rs 5,000.
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This article was originally published on November 22, 2010.
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