I am investing Rs 2,000 each in Nippon India Small Cap Fund, Invesco Contra Fund, HDFC Tax Saver Fund. All investments are in regular plan, growth option. I want to increase my monthly SIP to Rs 8,000 from Rs 6,000. Where should I invest and should I change my schemes? I want to invest for 15 to 20 years. I am targeting Rs 3-4 crore. I am news, so I have no idea about my risk profile. I think it is aggressive.
-Amandeep Singh
Do not be causal about your risk profile. Do not choose aggressive risk profile only to make extra returns. You would not be able to tolerate the losses and volatility associated with such high-risk schemes. Your risk profile is unique like your personality. It is a combination of your risk-taking ability and your willingness to take risk.
Many investors tend to be adventurous when they start investing. However, they realise their real risk appetite, only when the stock markets goes through a long bad phase. Only when they see their investments losing value sharply, say, 50-60%, and there is no signs of improvement, these investors realise the mistake. So, find our your risk profile by taking an online quiz. Ideally, a new investor should stick to safer equity funds like large cap schemes (for conservative investors) and multi cap schemes (for moderate investors) when they are starting to invest. They should take extra risk by turning aggressive and betting on mid cap schemes only after they gain some experience and confidence of investing in equity schemes.
You are currently investing in a small cap scheme, value-oriented schemes, and tax saver fund. Small cap scheme is extremely risky and they are suitable to aggressive investors with a longer investment horizon. Value-oriented schemes are meant for sophisticated investors bettering on the value investing strategy. Tax saving schemes, as the name suggests, are meant for investors looking to save taxes under Section 80C of the Income Tax Act.
Assuming an annul return of 12% on your investments, you need to invest around Rs 30,000 every month to create a corpus of Rs 3 core in 20 years. Do not be discouraged if you do not have a lot of money to invest now. Start with whatever you can invest, and keep increasing your investments every year in line with your salary hikes, you will be able to reach your target corpus. Investing a small amount regularly over a long period is the only way to create wealth.
