VR Logo

Moderate Expectations

I am going to retire this July. I have investments in NSCs, PPF etc and Rs 12 lakh to invest in mutual funds. Of this, I want to invest Rs 7 lakh for my daughter and want it to grow to Rs 25-30 lakh in 5-6 years time. Please suggest me excellent schemes so that I can achieve these.
- MN Chawla

I am going to retire this July. Apart from my investments in NSCs, PPF etc, I will be having Rs 12 lakh to invest in mutual funds. Of this, I want to invest Rs 7 lakh for my daughter and want it to grow to Rs 25-30 lakh in 5-6 years time. I would like to invest the balance Rs 5 lakh in those mutual fund schemes which can provide me with an annual tax-free dividend of around Rs 1.5 lakh to spend on my family members. Please suggest me excellent schemes so that I can achieve these.
-MN Chawla

As far as your first goal is concerned, to grow Rs 7 lakh to Rs 25 lakh in 6 years time, you are looking for a compounded annual growth rate of 23.63 per cent.

We think this is a bit on the optimistic side. Achieving that much over the last six years would not have been difficult, but things may not remain the same going forward.

Therefore, our advice would be to keep your expectations moderate and systematically invest in a couple of good diversified equity funds. Funds like HDFC Equity and Franklin India Prima Plus, Reliance Vision would be recommended.

As for your second goal, you are looking for regular returns of 30 per cent per annum. Thirty per cent per annum is simply out of question for debt funds. As for the equities, average annual returns of 30 per cent over a longer term are not entirely unimaginable, but expecting that much consistently year after year is wishful thinking.

Volatility rules equity markets and there can well be times when even the principal amount can be in the danger of getting eroded. Just look at the steep fall in the month of May. Therefore, we would leave that objective for you to rethink.


Post Your Query