Investment in mutual fund in India for long term goals

Question

I am first time planning to invest in mutual funds. My goal is long term investment. I am 32, married & from India.

I would like to invest Rs 10K per month in SIP mode. On reading couple of articles & some research over internet, I got to know about diversified investment where one should invest 70% in equity related & rest 30% in debt related funds. Moreover, In equity related fund, 65% should be large cap funds while rest 35% should having mid and small cap funds.

I have narrowed down some schemes for Rs 10K investment given below

• 3K in Franklin India Bluechip (Solely Large cap fund)

• 1.5K in Canara Robeco Balance(65% equity : majorly in large cap; 35% in debt, tax benefits also)

• 1.5K HDFC Mid Cap funds (70% contribution to mid caps)

• 2K in Axis long Term Mutual Fund (Multicap fund, tax benefits as well)

• rest 2K in some debt related mutual fund

I am not an expert in this area, thus seeking inputs from investment guru's preferably with Indian perspective to look on my shot listings & give me valuable suggestions.

Answer 1

1. Better to go with just 2 funds - 5K each
2. As you're new to investing in MF - Select large cap MF's

3. Buy only 'Direct' Plans, not regular. - Demat providers won't sell Direct plans, that you can do it through https://www.mfuindia.com

4. Make sure expense ratio < 2.5% (With direct plans it will be much lesser)

5. Select Growth funds
6. Check 10 years performance of a fund - If returns< 10% - just avoid it.
7. And importantly, don't stop SIP when a market went down!

I hope these points will help you to take a better decision.

Answer 2

On reading couple of articles & some research over internet, I got to know about diversified investment where one should invest 70% in equity related & rest 30% in debt related funds

Yes that is about right. Although the recommendation keeps varying a bit.

However your first investment should not aim for diversification.

Putting small amounts in multiple mutual funds may create paper work and tracking issues.

My suggestion would be to start with an Index EFT or Large cap. Then move to balanced funds and mid caps etc.

On this site we don't advise on specific funds. You can refer to moneycontrol.com or economictimes or quite a few other personal finance advisory sites to understand the top funds in the segments and decide on funds accordingly.

PS: Rather than buying paper, buy it electronic, better you can now buy it as Demat. If you already have an Demat account it would be best to buy through it.