I am a 28-year-old married woman with Rs 50,000 salary. Which mutual funds should I invest in? I can invest Rs 10,000 in SIP. How much will I make by retiring at age 60?
Name withheld on request
Reply by: Rajiv Bajaj, Chairman & MD, BajajCapital
Understanding an investor’s investment horizon, risk appetite, and goals is crucial before recommending an investment approach. Suppose an individual invests for the long term (more than 7-8 years) and possesses an aggressive risk appetite. In that case, they may consider constructing their portfolio around equities, as equities have the potential to deliver superior returns over an extended period. Assuming that your risk appetite is aggressive and the investment objective is long-term wealth creation, we recommend allocating a significant portion of the portfolio to the equity category, maintaining exposure across various market capitalisations.
To achieve this diversification, we suggest distributing your total monthly investable amount equally among the following funds: HDFC Large & Mid Cap Fund, Nippon India Multi Cap Fund, Motilal Oswal Mid Cap Fund, Tata Small Cap Fund, and SBI Contra Fund. By doing so, your portfolio will be diversified across categories, geographies, and asset management companies.
Taking an average return of 12 per cent annually, if you invest Rs 10,000 per month for 32 years, you can generate a corpus of approximately Rs 4.5 crore. You can reinvest this money or opt for a systematic withdrawal plan to get monthly income at retirement. You can also withdraw all the money, make plans, and invest your money accordingly in pension plans, annuities, etc., to generate regular monthly income after retirement.
Additionally, we advise reviewing your portfolio at least once a year to ensure it aligns with your evolving financial goals and market conditions. Also, you must plan for other financial goals such as foreign vacations, car purchase, etc., so that you can invest and achieve those goals successfully, besides achieving your retirement goal.
(Views expressed by the expert are his/her own)