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Balancing Act

Low risk option with equity upside is an investment idea worth exploring

My 23-year old daughter has Rs 85,000 to invest in mutual funds. She does not need this money in the foreseeable of ten years or more. Please suggest funds that she can invest in f or long-term growth. I am 56 and have Rs 4 lakh to invest. I do not need any returns from this investment until 2013 when I retire. Please suggest funds that I can invest in which are safe and offer returns which will be useful to me in retirement
- Jagdish Dalal

You come across as a reluctant investor who is considering mutual fund investment so late in life. It is still not late, but you need to know a few things before getting started. First, mutual fund investments work best when done systematically and for a long-term or for at least five years or more and with an objective. You have some clarity on what you want to do with the Rs 4 lakh that you have. We suggest you invest this into balanced funds, which are not too risky, yet have equity exposure that will help you earn better returns. Consider funds such as HDFC Balanced, HDFC Prudence or DSPBR Balanced and invest in them. You will observe their performance over six months and that may give you some confidence to try out large cap funds, which are risky, but also offer higher returns.

For your daughter's investment, with a ten year investment horizon she can consider investing in any of the large cap funds such as DSPBR Top 100 or IDFC Premier Equity Plan A, you may also look at the large- and mid-cap funds such as Birla Sun Life Frontline Equity or HDFC Top 200.

On both the investments; it will be best if you create a portfolio of few funds and track their performance at least once a year. This way, you will be able to not only track your fund performance; you will also have the option to exit poorly performing funds.



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