Investing in mutual funds over the long-term should achieve wealth creation
20-Jan-2011 •Research Desk
I want to invest Rs 10,000 through monthly SIPs. I am new to investing and wish to accumulate Rs 40 lakh in 16 years for my new born daughter. I am unable to decide on investing in a fund because of the current market levels. Please advice
– Lalit Parmar
We understand your apprehensions to invest at the moment going by the market movements. But, you should realise that there is no right or wrong time to invest. What one needs is to invest regularly over long periods to benefit from the market cycles and power of compounding which will help achieve your long-term goal. Your goal to create a Rs 40 lakh corpus is not impossible with the Rs 10,000 monthly SIP that you are planning. If your portfolio earns an annualised 12 per cent it will build a Rs 58 lakh corpus.
As this investment seems to be your first mutual fund investment, we would suggest you go with a balanced fund to start with and experience mutual fund investing and understand how your investments behave over the next six months. You can start investing in funds such as HDFC Prudence or Reliance Regular Savings Balanced fund. You can later move to a large-cap fund such as Franklin India Bluechip or IDFC Imperial Equity Plan A.