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Anything But Conservative

I am a 47-year-old conservative investor. I want to double my investment at the earliest. Please suggest some good balanced and equity funds.
-Nitin M Doshi

I am a 47-year-old conservative investor. I want to double my investment at the earliest. However, I can hold on to my investments if they drop temporarily. So far, I have invested in 12 funds and am planning to add HDFC Prudence and Franklin India Bluechip to my portfolio through the systematic investment planning route. Is my selection right? Please suggest some good balanced and equity funds.
-Nitin M Doshi

While you rate yourself to be a conservative investor, your portfolio shows no signs of conservatism.

When we scanned your funds through the Value Research Portfolio Manager, we observed the following points:

Equities account for 92.29 per cent of your portfolio. Majority of your funds have generously invested in relatively riskier mid- and small-cap companies--together stocks of the two capitalisation account for 56.56 per cent of your equity holdings. One-third of your funds are new and are thus not eligible for rating from Value Research. Rest of your funds command at least a three-star rating.

Overall, we would call your exiting portfolio aggressive. However, don't get scared yet. We suggest you forget about aggression and conservatism and concentrate purely on your investment horizon. If you can stay invested for the next four to five years, your current portfolio plus the two additions that you are planning should get the job done for you.

However, make sure that from hereon you allocate more funds to large-cap dominated funds Also, the most significant addition to your portfolio at this juncture could be a balanced fund and we are happy to see that you have already selected one of the best funds available This addition would not only give you the power of equities but also make your portfolio a tad less susceptible to market swings through its debt allocation.

Finally, you should be clear about the time of exit and make suitable adjustments as you approach your target. Broadly, you can break your investments into two parts--the one that you need in the immediate future and the other that you can afford to forget for two-three years. And when you approach your exit time, you should systematically liquidate the part that you need immediately. You can also redeem the amount from the equity fund and invest in cash funds, which offer better returns than your savings bank account.

As far as you desire to 'double your investments at the earliest' is concerned, we feel you should not let your desires overpower investment decisions. Everyone in the world would like to see his investments turn multiple times at the earliest. But no one can predict when it's going to happen. Investment is not a war. It's a battle that you have to win over a long period of time and only a disciplined and systematic approach can make that happen.