I am a 31 year old salaried person who is investing Rs 1,000 p.m. in IDFC Focused Equity Fund (direct, growth) and Rs 5,000 pm in Invesco India Growth Opportunity Fund (direct, growth). Earlier, I was investing Rs 10,000 p.m. in Mirae Asset Tax Saver fund (direct. growth) which I have stopped now. Now, I am saving tax by putting money in Sukanya Samriddhi Yojana and PPF. I am enjoying full rebate under Section 80C.
At present I can take out Rs 15,000 per month for starting SIP. Kindly advise the route map/ portfolio to follow for creating long term wealth. Should I increase my SIP in my existing funds or start investing in some new ones. I have a long term horizon of over 10 years and a moderately high risk appetite.
Raghvendra Nath, MD at Ladderup Wealth Management, responds:
Investment in equity mutual funds is the best way to create wealth over the long term where your investments can multiply 10-15 times based on the performance of the equity markets. Talking about the rebate under section 80C, investment in ELSS fund are also eligible for the same benefit alike PPF and Sukanya Samriddhi Yojana.
Also, if you were to look at the past data of ELSS fund performance, even the worst performing ELSS fund has delivered a return which is greater than PPF interest rates over the period of 15 years and as per your age profile, ELSS funds are more suitable than investment in PPF. You may want to partly allocate your savings to ELSS and PPF depending on your asset allocation preference. For your additional SIP investment of Rs 15,000 per month, I would recommend starting an SIP in Kotak Emerging equity scheme (Rs 5,000), Reliance Large Cap Fund (Rs 5,000) and DSP Equity Fund (Rs 5,000). If you continue with your SIP of Rs 21,000 for the next 10 years and also increase them by 5 per cent every year as your salary increases, you can accumulate close to Rs 1 crore in the next 10 years.