mutual fund scheme: I’m 50; which mutual fund schemes should I invest in to create a ‘good’ corpus in 8 years?


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I am 5
0 and want to start investing in mutual funds to build a good corpus by the time I am 56-58 years old. I can invest Rs 10,000-12,000 per month. I also invest Rs 4,500 per month in NPS and Rs 10,000 in PPF. How should I proceed?

Dev Ashish, Founder, StableInvestor and Sebi-registered investment advisor replies: It seems that your new plan is directed towards boosting your retirement corpus, and rightly so. The monthly Rs 4,500 in NPS I think is directed towards the additional Rs 50,000 tax benefit for Tier 1 accounts. Assuming the Active mode is chosen and you plan to have at least 50-60% in equity (or as much as allowed due to the age allocation restrictions post 50), you will have accumulated about Rs 5-7 lakh. But keep in mind that this NPS corpus will eventually have to be used partly to purchase an annuity later. The PPF Rs 10,000 monthly is expected to accumulate about Rs 8-12 lakh in 6-8 years assuming that average interest rates over the remaining tenure will be lower than the current 7.1%. The actual corpus in both PPF and NPS would be higher as you would already have some existing investments in both. For your MF investments, assuming a return of 10-12%, you can expect a corpus of Rs 12-13 lakh or Rs 18-20 lakh if you invest Rs 12,000 per month for 6 and 8 years respectively. Though I don’t know your risk appetite, but making some assumptions, I would suggest you pick just two funds to invest in. You can have one index fund (Nifty/Sensex-based) and one flexi-cap fund. Or you can simply opt for two index funds based on Nifty/Sensex and Nifty Next50. These pure equity funds should be sufficient. Do note that during later years, it would be prudent to cut down your equity exposure (after considering your overall asset allocation) to help you smoothly cross the retirement threshold without having to worry too much about the risk of poor sequence of returns. If you are unsure how to manage the crossover, please do get in touch with a Sebi registered investment adviser.

I am 25. My EPF deduction per month is Rs 6,000. I have NPS tier 1 with 75% equity allocation and I invest Rs 50,000 a year. I have PPF where I invest Rs 1,000 per month and one LIC policy (Jeevan Labh) with annual premium of Rs 70,000. I invested only in ELSS funds in lumpsum for the past four years for tax savings. I am now starting SIPs in multiple equity mutual funds. Please let me know if my portfolio is suitable for a horizon of 20-25 years. I have personal health insurance and also term insurance. The SIPs are as follows: Rs 5,000 each in Axis Growth Opportunities Fund, Mirae Asset Tax Saver, Parag Parikh Flexi Cap, Mirae Asset Mid Cap, Canara Robeco Small Cap Fund and Motilal Oswal NASDAQ 100 FoF. I am planning to add Axis Flexi Cap Fund as well.
Vidya Bala, Co-Founder, PrimeInvestor.in says, “You roughly have little less than 20% in debt and that makes it an aggressive allocation. If you can take the volatility, fine. Otherwise, add some short-duration debt funds. Within equity, you have about a fourth in mid-and small-cap and that also makes the portfolio a bit aggressive. If you plan to add more, use index funds such as UTI Nifty 50 or Axis Nifty 100 to provide some large-cap exposure. The funds you hold are fine. Canara Robeco Small Cap does not have sufficient track record for us to provide a view.”



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