Have I selected the right funds from your website

Firstly, please accept my sincere congratulations on the fantastic work your team is doing in educating novices like me. I reckon your site is easily the best out there as far as educating new investors on mutual funds is concerned. Now, coming to my question. Am 41 and realised rather late the importance of investing in mutual funds. But, I guess, better late than never. My goal is to accumulate wealth over the next 18 years (till my retirement). I have nothing against the SIP approach but am more comfortable investing small chunks of money monthly/quarterly as per my convenience. I plan to invest around 3 lakhs spread across 12 months. I fully understand the risks associated with mutual funds. Considering my age(41), I do not want to fall into the trap of investing aggressively to make up for my lost time. Instead, I would like to categorise my risk appetite as moderate to a bit risky. After going through the gold mine of information in your site, I zeroed in on a few funds. Would greatly appreciate if you can review my portfolio and advice me accordingly. Thanks to all brilliant articles, I decided not to have a cluttered portfolio and instead have a portfolio with 4 funds and I plan to throw in a debt fund to the portfolio after a couple of years to start balancing my equity-debt ratio. Large Cap Selection: I shortlisted with Kotak Select Focus Fund as my Large cap fund. I noticed that you chose to classify this fund as a "Diversified fund" where as Money control classifies it as a "Large Cap" fund. I believe this should not be too much of an issue if I stay invested for a long time (5-7 years). Need less to say, I plan to review the fund's performance every six months but only after the first three years. Diversified/Multi Cap Selection: I shortlisted Birla Sun Life Equity Fund as my diversified fund. Again, plan to stay invested for a long time(5-7 years) with the rider that, will periodically review the fund's performance after the first three years. Mid/Small Cap Selection: Franklin India Smaller Companies Fund is the one I shortlisted. Was tempted to go with Reliance but decided to stick with this tried and tested fund. Even if it returns 2-3 percent less than its competitors, am not going to lose any sleep over it. My expectation from this fund is to match the performance of the bench mark index. Anything over above the bench mark index will be treated as a bonus. Balanced Fund Selection: Again, thanks to your crisp blogs/articles on Balanced Funds, I decided to opt for it as I believe it suits my risk appetite. I decided to for the balanced fund from the DSP stable. I did consider HDFC and TATA Balanced Funds and honestly nothing much to choose between these funds. Considering DSP's pedigree as a fund house, decided to shortlist it. Lack of a Debt Fund in my portfolio. I read all your blogs on Debt funds. quite informative but I believe my portfolio does not warrant for a debt fund right now. I believe I will need a Debt Fund after about 2-3 years to balance my Equity-Debt ratio to protect my capital. For now, I wish to stay fully invested only in equities and the only debt part in my portfolio will come from DSP's Balanced account. Long Term Plan is to go for a debt fund and configure STP. Can you please review my portfolio and suggest accordingly? I invested Rs 1,00000 (One Lakh) till date and will invest another 2 lakhs in the same funds (Plan to allocate Rs. 60,000 to the Balanced Fund by the end of the year) over the next 7 months. DSP BlackRock Balanced Fund - Rs. 15000, Kotak Select Focus Fund - Rs. 25000, Birla Sun Life Equity Fund - Direct Plan - Rs. 20000, Franklin India Smaller Companies Fund - Direct - Growth (SIP) - Rs. 40000?

May 6, 2017 by Kalyan, Hyderabad | Mutual Fund

Thanks for the kind words about Advisorkhoj, Glad that you liked our content and research and could easily select funds for your investments. This is the whole objective of Advisorkhoj, empowering the investors and advisors!

Now, coming back to your query, we must congratulate you for selecting the right funds from categories suiting your risk profile. We are glad to note that you have understood balanced funds well and also understood how you can have exposure in debt funds via balanced funds. In fact, one of our internal research shows that over long term balanced funds generates as much return as large cap equity funds. But balanced funds are technically safer than large cap funds

We must also appreciate that you understand the risk reward ratio in mutual funds. Once this is clear to you along with your investment horizon and objective, you should always make good return from your investments over long term. However, we have two suggestions as well for you - 1) Since you are already 41, you should plan for your retirement and other life goals. If you know your goals then you can earmark savings for it and can chase the same 2) You should not avoid investing small chunks in SIPs. In fact, you should allocate your monthly surpluses to SIPs. This brings discipline in your investing and also benefits from rupee cost averaging. And, by the way, the monthly investment amount may look small but the corpus you may generate in future could be huge. For example - if you invest Rs 10,000 a month for 18 years (till your retirement), you can expect a corpus of Rs 81 Lakhs to Rs 1.10 Crores assuming return of 12.5% - 15%, against your investment of Rs 21.60 Lakhs only.

As you rightly said, it is never too late! The most important thing is that you have realised you need to save in mutual funds in order to create wealth for yourself! You have already won the half battle :) Good luck and cheers :))

Thanks for writing to Advisorkhoj.

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