I am 39 years old and want to create a corpus of Rs 1 crore in five years or less. To start with, I can invest Rs 20 lakh. Please advise.

Prableen Bajpai, Founder, Managing Partner, FinFix Research & Analytics replies, “Information such as your tax slab, risk-appetite, and future investments is essential for suitable guidance. Going with the available information, the first step is to decide your asset allocation. Investment horizon of five years or less limits your equity exposure, and this exposure will reduce with each passing year. This means that the overall investment return cannot be assumed to be more than 8-9%. To build a corpus of Rs 1 crore, you will have to invest a lump sum of around Rs 65 lakh now, assuming 9% return. The amount that you will need to invest to realise your goal will increase with time. The first tranche of Rs 20 lakh can be split between equity and debt investments in a 70:30 ratio. Within equity, you should stick with 1-2 large-cap funds. For debt, you can invest in an accrual fund. If you can take more risk, you may increase the equity exposure. Within accrual funds, you may pick corporate bond or credit risk funds if the investment horizon is at least three years. Your choice of products will need to be conservative as you move closer to your goal.”

I am 23 and have been investing Rs 2,000 each per month in Franklin India Equity Fund and L&T India Value Fund, and Rs 1,000 in Aditya Birla Small Cap Fund. I have been investing since May 2018 and at present, two of these funds are in the red. Should I exit these funds and invest elsewhere?

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C.R. Chandrasekar, CEO and Co-Founder, FundsIndia.com replies, “Your investments are in the red more due to market volatility than due to poor performance by these funds. However, you could possibly invest in a more differentiated and superior fund with a value strategy—Parag Parikh Long Term Equity—for future investments. Also, you should review the performance of Aditya Birla Sun Life Small Cap next year. You can continue with the Franklin Equity Fund. Consider adding some low-risk short-term debt funds for better asset allocation. Proper asset allocation can help reduce the impact of volatility on one’s portfolio.”



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