I have a monthly SIP for Rs1,000 in HDFC Taxsaver and HDFC Prudence. I want to start one more monthly SIP for Rs 1,500 in an equity fund. Between large-cap and mid- and small-cap category, which is better?
HDFC Prudence provides a good combination of growth and stability, whereas HDFC Taxsaver provides tax benefits on investments. The fate of tax planning funds is extended by another year till the clarity over the implementation of the new tax code emerges. You can continue investing in the tax planning funds until then, but do remember that these investments have a three year lock-in, which means each SIP investment will be locked for three years.
For the new fund that you plan to add, you need to first understand the risks associated with each category. For instance, a large-cap fund has lower risk compared to a mid- and small-cap fund. You can take a look at what we suggested and fine tune it according to your needs and risk-taking ability.