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I am a 24-year-old working professional. I have a ₹50 lakh term insurance, ₹4 lakh in fixed deposit (as my emergency fund) and ₹50,000 in Public Provident Fund (PPF). I also have a medical insurance cover and EPF that my company provides. I have paid my all loans and I am debt-free now.I would like to know what mutual fund should I invest in for wealth creation. My risk profile is medium,I would like to take calculated measures. How much should I put in large cap and mid cap section and which fund should I pick for investing? My investment horizon is more than three years. Also, I want to invest in automobile sectoral fund and private sector banks, as I believe these sectors would grow. Kindly advise me on this. I have a cash surplus of ₹15,000, and I am willing to invest ₹10,000 per month in these mutual fund schemes. I am not married and I don t have much of family liability.
- Abhijeet Singh
It is not very clear what is your investment horizon, as you have mentioned that your investment horizon is more than three years. We recommend equity investment only to investors who have an investment horizon of at least five years. If you can wait for at least five years, you can consider investing in a well diversified equity scheme. These schemes invest across market capitalizations and sectors and you can leave the job of taking a call on the prospects of different sectors and categories to an experienced fund manager.
We don't recommend investing in sector funds, as we believe it is very difficult for a regular investor to take a call on the prospects of a sector and time his entry and exit in a sector fund. This is because favourite sectors keep rotating and it is not easy to predict their movements. Also, a fund manager in a sector fund is forced to invest in the sector even when the prospects of the sector look gloomy because of his investment mandate. This would adversely impact your overall returns from your investment.
Here is a list of our best equity diversified schemes.
This article was originally published on October 13, 2015.
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