Have I chosen the right mutual fund schemes?

If you have any mutual fund queries, message ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

I am 25 years, and I am planning to start investing. I thought of investing in:

Mirae Asset Large Cap Fund: Rs 5,000

Canara Robeco Emerging Equities Fund: Rs 5,000

Parag Parikh Long Term Equity Fund: Rs 5,000

Axis Midcap Fund: Rs 10,000

SBI Small Cap Fund: Rs 10,000

SBI Dynamic Bond Fund: Rs 5,000

Is my distribution correct? Will this balance my portfolio? I am completely new to this. I am planning to invest Rs 40,000 per month.My risk appetite is moderate.I am planning to continue the polices for 10 years.
- Arvind Agarwal

First, if you are totally new to mutual funds and do not understand much about investing in the, you should not invest directly. You should take the help of a mutual fund advisor. Ask your friends or colleagues for a reliable advisor near you.

  • 6.44%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.7 YearsTime taken to double money
  • 8.97%Annualized Return for 3 year
  • >5 years Suggested Investment Horizon
  • 9.8 YearsTime taken to double money
Investors with moderate risk profile are typically asked to invest most of their investment multi cap mutual funds. If they want to diversify their portfolio to reduce the overall risk in it, they can invest a small part of their investments in large cap mutual funds.

You have chosen a large cap scheme, large & mid cap scheme, multi cap scheme, mid cap scheme, small cap scheme and a dynamic debt fund. Large & mid cap, mid cap, and small cap schemes are not suitable for your risk profile. Mid cap and small cap stocks are extremely risky and volatile. They are more suited for aggressive investors with a high risk appetite and ability to withstand volatility. It is not clear why you have chosen a dynamic debt scheme for your long-term goal.

You should adopt for a goal-based investing. Identify a few goals, both short, medium, and long-term. Find out how much money you need to achieve each goal and start investing a fixed amount every month to achieve them. You should include inflation in your calculations for your long-term goals as cost of goals go up every year because of the impact of inflation.

For short-term goals, stick to bank deposits and debt mutual funds. Note, it is very important to match your horizon with the debt fund. For long-term goals, you can invest in equity mutual funds. Since you have moderate risk profile, as said earlier, you should invest mostly in multi cap mutual funds. Finally, seek the help of a mutual fund investor.

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