I am 60. There is Rs 30 lakh in my PPF account that I do not need right now. Should I extend the account by five years, or should I invest the money in a mutual fund? I can take moderate risk.

Jayant R. Pai, CFP and Head of Marketing, PPFAS Mutual Fund replies, “Whether to extend or redeem your PPF account will be best answered by your financial adviser who is familiar with your financial situation. Mutual funds offer market-linked returns. There is also a risk of capital loss. With a horizon of five years, you can take some exposure to equity. However, only your adviser can tell you how much money can be invested in equity funds. I won’t suggest shifting from PPF to debt funds, as the latter does not offer sufficiently high, risk-adjusted post-tax returns, compared to PPF.”

I have been investing Rs 4,000 in ICICI Prudential Multicap and Rs 3,000 each in L&T India Value and Axis Focused 25 for the past two years. My investment horizon is 15-20 years. Should I make any changes?

Dinesh Rohira, Founder and CEO, 5nance.com replies, “Given your long investing horizon, equity mutual funds as an asset class will help you beat inflation over the long term. Though most equity schemes have underperformed due to the recent market correction, you should continue with the above schemes given their superior long-term track record and high risk-adjusted returns. Value oriented schemes take longer to deliver superior returns. You should have the patience to stay invested through a complete market cycle to reap benefits. As Axis Focused 25 Fund follows a concentrated approach in its portfolio construction, you can consider switching to Axis Midcap Fund from a risk-reward perspective. Considering the long horizon, you could consider investing in Mirae Asset Large Cap Fund and HDFC Small Cap Fund in future to cushion the impact of volatility. It is also advisable to attach goals to each of your investment and review your portfolio on a periodic basis to realign and take timely action.”

READ  Pensions: could you claim part of a £19bn cash mountain?



Please enter your comment!
Please enter your name here