I am a 32-year-old government employee. I am currently investing in the following funds for the last two years:
HDFC Hybrid Equity Fund – Direct Plan â Growth: Rs 3,000
ICICI Prudential Equity & Debt Fund â Growth: Rs 4,000
Mirae Asset Emerging Bluechip Fund â Growth: Rs 4,000
Motilal Oswal Multicap 35 Fund â Growth: Rs 3,000
SBI Bluechip Fund -Direct Plan â Growth: Rs 3,000
I am investing Rs 1.5 lakh annually in PPF for the last three years.
I want to purchase a house with a current value at Rs 70 lakh in the next five years. Please suggest me an investment plan to achieve this goal. my risk appetite is high/aggressive.
Currently, I am investing Rs 18,000 per month in the above-mentioned five mutual funds.
You have not mentioned whether you want to start a fresh investment plan to buy the house or you also want to use the current investments to buy the house.
Assuming an annual return of 9%, you must invest around Rs 92,000 every month to create Rs 70 lakh at the end of five years. Even if you assume a higher return of 12%, you still need to invest around Rs 85,000 per month. Since your salary is around Rs 65,000, it may not be possible to invest the required amount.
You can do two things. One, start saving and investing aggressively. Try to save as much as possible. After taking care of contingency fund and insurance needs, you should invest the rest of the money. Also, make sure that you also increase your investments in line with your salary increases. Two, have a slightly longer horizon to buy the house.
Also, do not chase returns if you are investing for five or seven years. When you focus on returns, you often start investing in high-risk options like small cap schemes. You should remember that the chances of losing money is very high in these investment options. Of course, they also have the potential to offer you higher returns. But you should continue with your investments in them without bothering about prolonged phases of losses.
Invest in risky options like mid cap and small cap schemes only if you have longer investment horizon of seven to 10 years.
If your investment horizon is five to seven years, you should stick to dynamic asset allocation funds, aggressive hybrid funds, and large cap mutual funds.
Your mutual fund portfolio includes two aggressive hybrid funds, a large & mid cap fund, multi cap scheme, and large cap scheme. Remember that large & mid cap schemes are meant for high-risk takers, other schemes are for conservative to moderate investors.