Can I achieve a goal of 1 Crore after 5 years by investing in SIPs

I am willing to invest in mutual fund. I will be doing a SIP of Rs 50,000 monthly & have created the following diversified portfolio - HDFC Balanced Fund(G): Rs 5000, Birla Sunlife Dynamic Bond: Rs 5000, Birla Sun Life Advantage Fund(G): Rs 8750, SBI Bluechip(G): Rs 8750, Franklin India Prima Fund(G): Rs 8750, Kotak Emerging Equity Fund: Rs 8750. My age is 25 years and target is to buy a home after 5 years worth 1 Crore. Please guide me with my investment portfolio?

Jun 1, 2017 by Shekhar Suman, Jamshedpur  |   Financial Planning

Glad to hear that you want to buy a home worth Rs 1 Crore after 5 years from your SIP corpus. Congratulations in advance!

You have selected good funds for your monthly SIPs and excepting Birla Sun Life Dynamic Bond Fund, rest of the funds are good for long term SIP investing. Having said that, please note that even though Birla Sun Life Dynamic Bond Fund is one of the top performing funds in debt category, being a debt fund it may not be suitable for achieving your above goal unless you have invested in it for asset allocation purposes.

We think, instead of investing in Birla Sun Life Dynamic Bond Fund, you should invest in Birla Sun Life Equity Fund, a top performing diversified equity fund. It is always advisable to invest in equities, which is the best asset class, for achieving your long term goals.

However, I am afraid that by investing Rs 50,000 a month, you will be able to generate a corpus of only Rs 42 Lakhs after 5 years. Therefore, either you have to increase your monthly SIP contribution significantly (double than what you are doing now) or wait for another 4 years, i.e. after 9 years, you can get the desired corpus of Rs 1 Crore (the corpus calculation is done at assumed annual return of 12.5%)

Hope you find the above useful. Thanks for writing to Advisorkhoj!