I want to invest Rs 2 lakh a month for 10 years via SIPs. Which MFs should I invest in?
BY ET CONTRIBUTORS | DEC 24, 2018, 11.33 AM IST
My debt funds and FD investments are worth Rs 55 lakh, and I want to invest this sum in mutual funds to generate higher returns over the next 10 years. I also want to invest Rs 2 lakh a month for 10 years via SIPs in MFs. Please suggest schemes.
Rahul Parikh, CEO, Bajaj Capital answers: You can invest Rs 55 lakh in dynamic asset allocation funds for the next 10 years. Dynamic asset allocation funds invest in a mix of equity and debt. The mix is changed occasionally based on the valuations of the equity market and equity allocation generally remains between 30% and 80%. Over the long term, these funds have the potential to give returns similar to pure equity schemes and they are much less volatile. Also, these funds are treated as equity funds for tax purposes. Some popular dynamic asset allocation funds include DSP Dynamic Asset Allocation, ICICI Pru Balanced Advantage, and Reliance Balanced Advantage. For monthly SIPs, you can opt for multi-cap equity funds such as Mirae Asset India Equity, Motilal Oswal Multicap 35, ICICI Pru Multicap and SBI Magnum Multicap fund.
If I start a systematic transfer plan from a debt fund after holding the fund for 36 months, how will the long-term capital gain tax be calculated?
Amit Maheshwari, Partner, Ashok Maheshwary and Associates answers: Transfer to another scheme will be treated as redemption from the debt fund and investment in the other scheme. The gains will be taxed at 20%. To calculate long-term capital gain (LTCG), you will have to subtract the indexed cost of purchase of the fund units from their NAV at the time of their transfer into another scheme. The indexed cost is calculated by multiplying the purchase price of the fund units with the cost-inflation index of the year in which the units are redeemed / transferred and then dividing it by the cost-inflation index of the year in which they were purchased. You will have to calculate the LTCG each time you make the transfer.
I am 25 years old and I want to invest Rs 4,000 per month for the next 30-35 years. I have not invested in mutual funds before. Where should I invest this sum?
C.R. Chandrasekar CEO and Co-Founder, FundsIndia.com answers: You can consider investing Rs 3,000 per month in Mirae Asset India Equity and Rs 1,000 in HDFC Short Term Opportunities. You can consider investing in some mid-cap funds as and when you increase your investment. Review your portfolio at least once a year.
I want to build a corpus of around Rs 50 lakh for the higher education of my two children, aged eight and 10, by investing in mutual funds. Please suggest schemes and the amount I should invest per month to achieve this goal
Prableen Bajpai, Founder, Managing Partner, FinFix Research & Analytics answers: As your kids are eight and 10 years old, you have an eight- and 10-year investment horizon, respectively— assuming they will enter college when they are 18. So, the first tranche of money will be needed eight years from now. For this, you may invest in a large-cap fund for six years and then move the corpus into a debt fund gradually over the next two years. Assuming 12% return, an SIP of Rs 22,000 for the next six years should help generate around Rs 23.17 lakh. Moving to a debt fund via sytematic withdrawal plan will ensure that you secure the accumulated sum while ensuring a reasonable growth of around 8%. Follow the same strategy for the money needed after 10 years. Here, the slightly longer time horizon gives you the liberty to choose a multi-cap fund instead.Assuming 12% return, you will need to invest Rs 14,500 a month to generate Rs 23.29 lakh in eight years. Start moving into debt after eight years. For large-cap funds, you may consider ICICI Prudential Blue Chip and Aditya Birla Sun Life Frontline Equity, and for multi-cap funds, Kotak Standard Multicap and Mirae Asset India Equity. Do not invest in more than 3-4 funds. You may also take the call on moving from equity to debt depending on the market conditions at that time.