Ask Money Today: Which mutual funds should I choose to invest Rs 2,000 per month?

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I am a student, I want to start investing from my pocket money. Which is a good mutual fund? I can start investing Rs 2,000 to Rs 3,000 per month. What kind of interest (return) can I get? I can invest for five to 10 years. I do not have any special goal. My only objective is to create wealth.

-Jaya SomNath

By Raghvendra Nath, MD, Ladderup Wealth Management

It is great to see when someone begins his or her investment journey at such an early age. By starting early you will stay ahead of the curve and are bound to reap the benefits of compounding in the later years of your life. There are multiple asset classes available for investment with debt products on one hand, which offer fixed returns, and equity investments on the other, which are driven by market forces.

Also read: Ask The Expert: How to earn Rs 1.5 crore by investing Rs 7,000 per month in mutual funds?

With your investment horizon of five to 10 years and suboptimal returns generated by current fixed income products, which fail to beat inflation, I would recommend you to invest in the equity markets. One can expect to generate returns of 12-15 per cent over longer time frame. Given your age profile and your unlikely need for dipping into the investment corpus, I would recommend you to invest into a mid cap focused fund. You can invest the amount into DSP Midcap Fund or Kotak Emerging Equity Fund. Both of them are mid cap focused funds. Both the funds invest into companies which are market leaders in their respective industry and thus can be held for long term.

(Views expressed by the investment expert are his/her own. You may e-mail us your investment queries at mymoney@intoday.com. We will get your queries answered by our panel of experts.)