I am 24 years old and have recently started working and am drawing Rs 27,000 as take home salary. My short term goal is investing for my marriage in next 2 years. My risk profile is conservative. I am ready to invest around Rs 15,000 per month through SIP to accumulate around Rs 4 lakh in two years. I am thinking of investing Rs 3,000 in ICICI Prudential Focused Bluechip Equity and Fidelity Equity; Rs 2,500 in Quantum Long term Equity and HDFC Prudence; Rs 2,000 in HDFC Equity and Birla Sun Life 95. Is it a good portfolio or do I need to change something in it?
-Tausif Mulla
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It is heartening to note your effort to invest for the next two years to save up a significant sum for your marriage. There are several ways to achieve your objective of accumulating Rs 4 lakh with monthly investments of Rs 15,000 over the next two years. For instance, with little tweaking of the funds in your planned portfolio you should be able to achieve more than what your goal is if the markets fare well from now on to help you splurge well on your marriage and make it a grad affair. You can also initiate a recurring deposit for Rs 10,000 and continue investing in a large- and large- and mid-cap fund with the balance Rs 5,000 and still achieve your goal. By depositing Rs 10,000 every month earning 8.5 per cent interest rate per annum, after two years your maturity amount will be Rs 2.62 lakh and if your mutual fund investments earn an annualised 15 per cent return you will accumulate Rs 1.40 lakh which will add up to Rs 4.02 lakh which is what you need. The reason to suggest a recurring deposit is taking into account your conservative risk profile, besides that is what two equity-oriented hybrid funds achieve by automatic rebalancing the portfolio; you can achieve it by having a 66 per cent allocation to fixed returns in recurring deposit and the rest invested in equity. The choice is for you to have a wedding within your budget or one that is celebrated in a grand manner.
This article was originally published on January 23, 2012.
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