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I am 39 years old and have a son aged two.  My wife and I are planning to invest around ₹30,000 a month in mutual funds for five years or more. The funds I am considering are HDFC Mid-Cap Opportunities - ₹10,000; Canara Robeco Emerging Equities - ₹5,000; Canara Robeco Equity Diversified/Franklin India Blue Chip/Mirae Asset India Opportunities - ₹5,000 and HDFC Balanced - ₹10,000. Please advise which combination I should go for. 

Pradeep Kumar

To begin with, ₹30,000 a month is a fairly large sum to set aside for mutual fund investments. But a five-year time horizon may not be enough. Spreading investments over 8-10 years or more will give your funds ample time to ring in a market-beating performance and beat inflation quite convincingly.

Markets generally do not fail to deliver over 10-year timeframes, though the same cannot be said of five-year investments.

Ideally, monthly mutual fund investments can be directed towards long-term goals. In your case, you can perhaps target investments towards your child’s higher education and/or your retirement, about 15-20 years later. If you invest ₹30,000 for 15 years and you get a conservative 12 per cent compounded annual return, you will end up with a corpus of about ₹1.5 crore at the end of the period.

Coming to the funds, it is good that you have decided to spread the sum among a limited number of funds. But the choice of funds can be tweaked a bit.

First, if you can invest for longer than five years, do away with the balanced fund. Have a combination of large-, mid- and multi-cap funds instead. Among your choices, Franklin India Bluechip is a pure large-cap fund and Canara Robeco Equity Diversified is a large-cap-oriented fund taking 20-25 per cent exposure to mid-caps. But both these are not top-quartile performers. You can choose ICICI Pru Focused Bluechip and Quantum Long Term Equity and park ₹7,500 in each of these funds. Coming to mid-caps, you have done well to zero in on HDFC Mid-Cap Opportunities, which has a solid track record across both up and down cycles in the market. Invest ₹7,500 here. The remaining ₹7,500 can be put into Mirae Asset India Opportunities, a multi-cap fund.

Also, remember to balance out equity investments with debt. You can invest in PPF either in your/spouse’s/child’s name. Try to add gold and real estate as well over a period of time.

I am 44 years old and have been investing ₹5,000 a month in the following funds for the last two years: Birla Sun Life Frontline Equity - ₹1,000; HDFC Mid-Cap Opportunities - ₹1,000; IDFC Premier Equity - ₹2,000 and Kotak Classic Fund - ₹1,000. I want to invest for 10 years. My target is to accumulate ₹15 lakh.

Kavitha Dayagala

If you invest ₹5,000 a month for 10 years, and want a corpus of ₹15 lakh at the end of the period, your funds should earn at least 16-17 per cent compounded annual return. The return expectation is on the higher side. But going by the last 10 years, this may not be impossible. Top performers across large-, mid- and multi-cap categories have garnered 20-25 per cent returns in the last ten years.

Moving to your choice of funds, you need not diversify across four funds for a sum of ₹5,000. Continue with Birla Sun Life Frontline Equity and HDFC Mid-Cap Opportunities and park ₹2,500 in each. Stop SIPs in IDFC Premier Equity and Kotak Classic. While the former has been an under-performer among mid-cap funds in recent times, the latter too is only an average performer.

I want to invest ₹2,000 every month through SIP. Which fund is best to invest in right now?

Sudhakar Nandigam

You can invest in UTI Opportunities, which invests predominantly in large-cap stocks. It has a dependable track record of containing downsides during market falls and provides reasonably good returns when markets move up.