I am 26 and earn Rs55,000 per month. I started investing very recently and have investments in 9 funds and the NPS. I do not have any other investments and I am strictly going to stick to this for at least one year. I am single and can take some risks with my investments at this stage. Is this the right approach?
- Sreenath
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You have made a good start by investing in mutual funds through SIPs. However, in your hurry you have made investments in a number of funds without a plan. Packing your portfolio with nine funds does not mean it is well diversified. What you need is a mix of style and investment themes to build a robust portfolio. You should look at investing with an objective and work towards it.
Age is on your side and at this stage you can take the risk which you are willing to take and consider a portfolio that is 90 per cent into equities; which means your selection of a balanced fund (HDFC Prudence) does not find place in the portfolio. Also, why do you need to invest in monthly income plans (MIPs)? Continue your investment in the NPS, as it is a good long-term tax planning option, especially once the Direct Tax Code (DTC) kicks in from next year. We have suggested an alternate portfolio. One that will offer superior diversification and is more aggressively tilted. But make sure you do invest regularly in these funds and also track its performance periodically.
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This article was originally published on May 13, 2011.
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