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Balanced Beginnings

New investors should put their money in balanced funds to first understand & learn how mutual funds work…

I am 37 and want to start investing in mutual funds through Rs 1,000 SIP. Please suggest the most suitable funds to invest in for the next ten years. I want to accumulate Rs 10 lakh in this period.
- Sudip Bhattacharjee

For a new investor, it would be a good idea to start investing in a balanced fund, which are actively managed for a few months to understand, familiarise and experience how investments in a mutual fund works. You can consider investing in funds such a HDFC Prudence and Reliance Regular Savings Balanced. Once you understand how SIP investments in mutual funds work, you can look at investing in large-cap funds such as Franklin India Bluechip or DSPBR Top 100 Equity to invest in.

Your current investment of Rs 1,000 in a fund for the next ten years will build a corpus of Rs 2.3 lakh if the investment earns an annualised 12 per cent or Rs 2.7 lakh if it the same investment earns 15 per cent. To achieve your goal of accumulating Rs 10 lakh in ten years, you need to increase your investments to Rs 4,310 if the fund earns 12 per cent or Rs 3,600 if the fund earns 15 per cent returns.

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