While the equity outlook may appear quite bright for the next three years, you cannot be assured of returns
16-Jan-2015 •Research Desk
I would like to invest ₹50,000 in a NFO or in an existing fund through a single investment mode, expecting a return of amount ₹72,000 after 3 years as my sister's marriage is likely then. Please let me know how I can make this happen.
- Vishal Saxena
First of all, with equity investments, there are no guarantees. Therefore, while the equity outlook may today appear quite bright for the next three years, you cannot be assured of your investment of ₹50,000 turning into ₹75,000 exactly three years hence, when your sister's wedding is scheduled. However, the returns you are seeking amount to about 14.5 per cent on a CAGR basis and may be possible, if stock markets perform well in this period.
If you are prepared to assume such risk, you should refrain from investing in an NFO and instead choose a fund with a compelling track record. Investing regularly would be a better option than a lumpsum investment to reduce timing risks. Given your not so long horizon, we suggest you invest the ₹50,000 in a balanced fund.
Balanced funds invest atleast 65 per cent of the money in equity and the rest in debt market instruments. They have an in-built mechanism to rebalance the asset allocation and are geared to provide safety along with capital appreciation. You can select any of the funds from HDFC Balanced, ICICI Prudential Balanced Advantage or Tata Balanced as these have been consistent performers.