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Should I Add More Funds?

I am investing Rs 1,000 every month in six funds. I want to make additional investment worth Rs 3,000-5,000 per month. Should I go for some more funds?

I am 25 years old. I have started investing in mutual funds for the last five months. I have six funds: Franklin Bluechip, Franklin India Prima, HDFC Taxsaver, HDFC Long Term Advantage, HDFC Prudence and Prudential ICICI Taxplan and I invest Rs 1,000 in SIP in each fund. I want to invest Rs 3,000-5,000 more every month. I could invest in the current funds or go for some new funds. Please advice.

It feels good to see that you have such a clear focus at a young age. The younger you start investing, the higher the benefit of compounding. You have not been lured by the new fund offering madness and your selection of funds is excellent. Your approach of systematic investment planning is also the right one. You are young to invest a substantial part of your savings in equities, which is the correct approach for long-term investing. However, you do have too many funds for an SIP of Rs 6,000. Four, or even three funds should be enough. With your additional investment up to Rs 5,000, your total monthly investment will go to Rs 11,000, and here you should try to maximise the Rs 1 lakh limit for tax purposes if you forego the liquidity. Our advice would be to increase investment in the three tax-saving funds in your existing portfolio.

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