I am 25-years-old and have just started working. I plan to invest in seven mutual fund SIPs — two funds each in ELSS, large caps, equity diversified and one in small cap. Is this strategy correct?
— Sankar Raman
It is good that you have considered investing through the systematic investment plan (SIP) options offered by mutual funds at the onset of your career. Since you have time, consider two tax-planning funds and two multi-cap funds. The ELSS allows you to save tax and good multi-cap funds will help you with returns. You don’t need seven funds as too many funds, especially when you are just about to start investing, may be difficult to manage. Also, with fewer funds you are not going to miss out on returns or style diversification.
This article was originally published on January 03, 2011.
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