personal finance

Should I switch to other mutual funds?


I have been investing in various ELSS mutual funds via SIP.
Reliance Tax Saver (ELSS) Fund: Rs 5,000 per month
Axis Long Term Equity Fund: Rs 5,000 per month
Aditya Birla Sun Life Tax Relief 96: Rs 2,000 per month
Mirae Asset Tax Saver Fund: Rs 500 per month

I am also investing in:
Reliance Small Cap Fund: Rs 1,000 per month
SBI Small Cap Fund: Rs 5,000 per month

My investment horizon is seven to 10 years. Are these funds good? Or Should I switch to other funds? If yes, which mutual fund schemes and why?
–Tapas Ghosh

Puneet Oberoi, CFP, Director, Excellent Investment Advisroz, responds:

You have chosen good schemes. Your portfolio is heavy on mid cap and small cap funds, which are okay if you have a horizon of seven to 10 years. However, they are highly risky. If you can bear with short-term high volatility, continue investing in them. Otherwise, switch to large cap funds.

You should also keep in mind that ELSS funds come with a mandatory lock-in period of three years. That means, if you invest in ELSS funds through the SIP mode, you can withdraw some money only after the completion of the 4th year. That too, only the SIPs made in the first year. In other words, you cannot withdraw the entire amount at one go. For example, if you have invested for 10 years and want to withdraw the money, you can withdraw only the SIPs made until seven years. You cannot withdraw the entire investment after 10 years.

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Here are some good large cap funds you can consider investing: Mirae Asset Large Cap Fund, SBI Bluechip Fund, Kotak Standard Multicap Fund.





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