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Mutual Fund Corner. Q: 35-year-old Meshach John writes us from Bengaluru. For my retirement, I am investing Rs 7,000 per month in Reliance Small Cap Fund Growth (Rs 3,000 per month), HDFC Small Cap Fund Regular Growth (Rs 2,000 per month) and L&T Large Cap Fund Growth (Rs 2,000 per month) for nine months, with a goal of Rs 3 crore in 25 years. Will I be able to achieve my goal with this portfolio? If no, what are the changes to be done to the existing portfolio or what additional investment to be done? I have a child of five months old and for education, I would need Rs 2 lakh in two years, Rs 5 lakh in five years and Rs 50 lakh in 18 years. How much investment to be done and what funds to invest?
With your current investments of Rs 7,000 per month, you will be able to accumulate around Rs 2 crore in 25 years. In order to achieve your goal, we would suggest you increase your SIP amount to at least Rs 9,500 per month. Of the three funds, two funds are small-cap funds. It is not advisable to have large exposure in small-cap funds as these funds tend to be volatile. It is wise to have a well-diversified portfolio with 60-65 percent in large-cap and rest in mid and small cap. You can continue with HDFC Small Cap Fund. We would suggest you exit from Reliance Small Cap and L&T Large Cap Fund as the funds have underperformed its category average and benchmark in the three years and five-year time frame. You can invest in Reliance Large Cap Fund and Kotak Emerging Equities Fund.
Since equity markets are volatile in the short term, it is better to keep a target of five years rather than two years. In order to achieve your goal of Rs 5 lakh in five years, you need to invest Rs 6,000 per month in equity mutual funds. You can invest in Mirae Asset India Equity Fund. In order to achieve your goal of Rs 50 lakh in 18 years, you need to invest Rs 5,000 per month in equity mutual funds. You can invest in Canara Emerging Equities Fund and Kotak Standard Multi-Cap Fund equally.
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