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Investing in mutual funds works best when it is directed to achieve a financial goal

I have started investing Rs 2,000 in HDFC Top 200 and Franklin India Bluechip. I can invest Rs 4,000 every month. What funds should I invest in for the long term?
Nitisha

We are unsure of what you mean by Rs 2,000 in the two funds. Are you investing Rs 2,000 in each of them or both of them? Having said that, let's move on to your need of investing Rs 4,000 wisely.

What you can do is invest Rs 2,000 in each of the funds you mentioned. Your portfolio will have a broad large-cap exposure but also a mid-cap tilt.

On the other hand, you can invest in three funds from three different asset management companies (AMCs), each falling under a different category.

If you go by the portfolio we have suggested (see table) and the stated amounts for a systematic investment plan (SIP), you would have an exposure of around 93 per cent to equity, out of which the large-cap allocation would be around 70 per cent.

There is another alternative. If you want to consider a tax planning fund, then pick either Canara Robeco Equity Tax Saver or Franklin India Taxshield in place of IDFC Premier Equity Plan A.



Suggested Portfolio
Schemes  Category  Rating  SIP (Rs)
Franklin India Bluechip Large Cap ***** 1,500
HDFC Top 200 Large & Mid Cap ***** 1,500
IDFC Premier Equity Plan A Mid & Small Cap **** 1,000.00
Ratings as on February 28, 2011


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