Your Queries (Mutual Funds): Go for balanced advantage fund if you have 5-year investment horizon

This manner your portfolio shall be diversified throughout asset class, class, scheme & AMC. It’s advisable to maintain
reviewing your portfolio at the very least one in a yr.

By Sanjiv Bajaj

I’ve Rs 20 lakh and want it to purchase a home after 5 years. How ought to I make investments the cash to make sure security and get excessive returns?
—A Ok Venkatesh
Chances are you’ll select dynamic asset allocation or balanced benefit funds for the funding for the subsequent 5 years. These funds are managed dynamically between fairness & debt devices with a method to guard the draw back with debt publicity whereas taking part the upside in equities. Investing in pure fairness funds could possibly be dangerous whereas funding in pure debt funds affords very low yield. This technique strikes a steadiness between threat and returns with decrease drawdown than a pure fairness funding and better return than a pure debt funding.

I’m 38 years outdated and wish to make investments Rs 25,000 monthly for the upper training of my eight-year-old little one. What sort of mutual funds ought to I am going for to reap the return when he’s 23?
—Arjun Jain
You haven’t talked about how a lot threat you possibly can bear, contemplating your age and objective, we’re assuming your threat urge for food shall be lengthy term-aggressive . Chances are you’ll create a mutual fund portfolio consisting of pure fairness & hybrid funds. The month-to-month funding might be divided in an 80:20 ratio, respectively. Flexi-cap, massive & mid-cap, mid-cap, small portion in worth and small-cap funds in fairness whereas dynamic asset allocation funds in hybrid class might be thought of.

This manner your portfolio shall be diversified throughout asset class, class, scheme & AMC. It’s advisable to maintain reviewing your portfolio at the very least as soon as in a yr.

I’ve been investing Rs 5,000 in a mutual fund for 3 months. What are the deductions on withdrawal? How a lot will I get after 20 years if the common return is 12%?
—Anurag Majumder
If we contemplate a 12% annual progress charge in your Rs 5,000 month-to-month funding over the subsequent 20 years, it should accumulate a corpus of round Rs 50 lakh. Taxation in mutual funds is classed as short-term capital achieve and long-term capital achieve relying upon the funding horizon and asset class. Debt, fairness & hybrid have their very own matrix of taxation. Previous information and foreseeable market circumstances could assist us to get an affordable estimation of 5% inflation yearly.

The author is joint chairman & MD, Bajaj Capital. Ship your queries to fepersonalfinance@expressindia.com