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I am 25 and started investing in mutual funds through monthly SIPs for the next 35 years. I am investing Rs 500 in Fidelity Equity and DSPBR Small and Mid Cap and Rs 1,000 in HDFC Balanced. Please comment on my fund selection as I plan to increase my investments in these funds by 10-20 per cent every year.
Ravi Patel

Fund   Category  Rating  3 Year return (%)
DSPBR Small & Mid Cap Eq: Mid & Small **** 21.31
Fidelity Equity Eq: Large & Mid **** 15.64
HDFC Balanced Hy: Equity-oriented ***** 18.96
Return as on September 15, 2011, Rating as on August 2011

You have got it right. Investing at a young age and doing it systematically. Keeping a long-time frame for your equity investments and increasing the amount invested every year. The fund selection is good too. Your monthly investment is Rs 2,000. Instead of putting half of that in a balanced fund, do the reverse. Put just Rs 500/month in the balanced fund and instead add another fund to your portfolio. So you should have Rs 1,500 going into three equity funds. Take your pick from a good performing fund from the 'Equity: Large & Mid Cap' and 'Equity: Multi Cap' categories.
Don't sit tight on your portfolio for 35 years. Fund performance changes with time and it is vital for you to track the performance of your investments at least once a year and evaluate its performance. This way you can exit under performing funds and invest in funds that perform consistently for long-term wealth creation.



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