I am 27 and wish to invest Rs 8000 every month to maximise returns. I wish to know which funds to invest in to earn Rs 1 crore in 15 years.
– Kumar Mangesh
At your age the eagerness to invest in mutual funds through the systematic investment plans will take you a long way. For a new investor, you should start investing in a balanced fund. These are funds that have 35 per cent equity exposure which brings in stability to their performance and also insulates the returns from market volatility. Invest in these funds for the next six months to get into the habit of investing and experience the performance of your investment in them. You can consider investing in funds such a HDFC Prudence and Reliance Regular Savings Balanced. You can then move to a large-cap fund such as DSPBR Top 100 Equity or Franklin India Bluechip or large- and mid-cap funds such as HDFC Top 200 or BSL Frontline Equity. If you can take some risks; split the Rs 8,000 into two SIPs and start investing in a balanced fund and a large-cap fund.
An investment of Rs 15,000 a month earning 15 per cent annually will build a corpus of Rs 1 crore in 15 years. Do not get bogged down by this daunting investment which is almost twice what you are currently willing to invest. With time, your income will increase and you will be able to set aside a higher sum towards investments. The incremental increase in investments over time combined with the power of compounding should help you achieve your goal.
This article was originally published on April 13, 2011.
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