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Mutual Fund Corner: How much should I invest in mutual fund schemes to create Rs 10 crore in 30 years?

Updated : January 31, 2019 05:07 PM IST

Want to invest in mutual funds but don’t know how to go about it?

Get all your mutual fund related queries answered by our expert, Manoj Nagpal, managing director and chief executive officer, Outlook Asia Capital, on our show Mutual Fund Corner.

Q: 28-year-old Nikhil Anchliya writes us from Mumbai. My goal is Rs 20 lakh after 17 years, Rs 50 lakh after 20 years, Rs 1 crore after 26 years and Rs 10 crore after 30 years. Please advice where should I invest and how much should I invest? Regarding my fourth goal of Rs 10 crore, this is for my home. Do you think purchasing flat worth of Rs 50 lakh today would be better than investing in mutual fund for next 30 years?

A: Along with market cap orientation, you should look at investment style diversification. Ideally, a multicap fund would be a good strategy for you to follow. However, for very long term i.e. 20 years plus years, you could also follow a midcap orientation to maximise returns. So for the goal which is around 17 years, you could choose a multicap fund with a value theme and invest around 2.5-3 lakh now.

For the 20 years horizon, you could choose an aggressive multicap fund with a growth style and invest around Rs 4 lakh now. And for the 26 years, you could choose a midcap strategy focused on longer term demographic dividend play and invest another Rs 4 lakh in that fund. Buying a house is more of an emotional decision of having your own house.

Financially staying on rent is a better option especially given the current rental yields of around 2-3 percent in India. Real estate investment with a lever of a home loan works well only when the real estate cycle is in an upturn, which it is not now. So my suggestion would be that if you can wait, then maybe buying a house a bit later will be a better strategy at least purely on financial consideration.

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