I am 28 years old and run a small scale business which does not ensure any regular income. I made a one-time investment of ₹60,000 in dividend reinvestment option of Birla Dividend Yield and UTI Dividend Yield Fund for long term investing needs. Can these two schemes generate a corpus of ₹50 lakh when I am 60 years old? I invested in these schemes in January 2013.
-J Arun Prem Kumar
We continually advise our readers to invest systematically instead of a lump sum. You should spread your investment over time to get the benefit of rupee cost averaging. If you have a lump sum to invest in equity, you should put the money into an ultra short-term fund and systematically transfer it into an equity fund.
Both the funds that you have chosen are four or three star rated funds with a good long-term track record. However, both of them follow a similar theme and invest in high dividend yielding stocks. One should not invest in two funds with similar theme to avoid duplication and concentration in the portfolio.Although UTI Dividend Yield is a large & mid cap fund and Birla Sun Life is a mid & small cap fund, nearly 50 per cent of their portfolio is invested in same stocks. Also, we cannot predict how funds will perform in future but one can choose good investment options looking at the past record.