1. Advisorkhoj
  2. Post Your Queries
  3. Mutual Fund
  4. I have started an SIP of 3500 last month and planning to increase it up to 10000 within next month

I have started an SIP of 3500 last month and planning to increase it up to 10000 within next month

I have started an SIP of Rs. 3500 since last month and planning to increase it up to 10,000 within next month. I am looking at long term aspect i.e at least 5 years. My portfolio details are following - Already invested from last Month, ELSS - Birla Sun Life Tax Relief 96 (G) 1000, Large Cap - ICICI Prudential Focused Bluechip Equity Fund (G) 1500, Hybrid - Reliance Retirement Fund - Wealth Creation Scheme (G) 1000, Multicap - Motilal Oswal MOSt Focused Multicap 35 Fund - Direct Plan (G) 2000, (MOSt starting from 28/2/16). Planning to Invest in coming Month - MidCap - BNP Paribas Midcap Fund - Direct Plan/Mirae Asset Emerging Bluechip Fund 2000, ELSS - Axis Long term Equity 2000, I am thinking to switch from Reliance Retirement Fund. Would that be a right decision? (I know it is too early, to switch from NFO). How my remaining fund selection looks like? Is it well balanced? Any change is required? Should I look after balanced or Debt oriented fund as well? Secondly, I am thinking to do do lumsum investment around 10-20K in Motilal Oswal MOSt Shares NASDAQ - 100 ETF Fund. would that be wise decision? Brief about me, I am 33 years old and have 3 year child?

Jan 28, 2016 by Madhu, Pune  |   Mutual Fund

Since you are young and have a young family, equity is the ideal asset class for you. As you grow older, you can gradually start shifting your asset allocation to debt by investing in balanced and debt funds. As per a popular asset allocation thumb rule, The Rule of 100, by the time you are fifty, you should 50% equity and 50% debt in your portfolio.

Why do you have an investment horizon of 5 years? Do you need the money after 5 years? Your investment horizon should be based on your needs. We have seen that SIPs can create substantial wealth for investors over a 10 to 15 year horizon. Therefore, you should continue your SIPs for as long as possible, unless you need the money.

You have selected good funds for SIPs. The ongoing volatility in the market will help you average the rupee cost of purchase of units of the schemes chosen by you. Based on your query, you have already identified schemes where you can invest Rs 9,500 on a monthly basis. Since you plan to invest Rs 10,000 monthly through SIPs, you can simply increase one of the SIPs by Rs 500. First look at the tax saving SIPs. If you do not have all your 80C investments identified for FY 2016 – 2017, you can increase the SIP of one of your ELSS funds by Rs 500 (you can choose either of the ELSS funds selected by you, to increase the SIP). If you have identified all your 80C investments, then you can increase the SIP in any one of the other schemes by Rs 500.

As regards your question regarding Reliance Retirement Fund, you should note that the scheme has a lock in period of 5 years, which implies that you cannot redeem your units of Reliance Retirement Fund before 5 years from the respective investment dates of your SIP instalments. Further, if redeemed before you reach the age of 60, an exit load of 1% will be deducted from your redemption proceeds. As you have rightly said, it has not been a year since the NFO of Reliance Retirement Fund and it is too early to judge the performance of the fund. Reliance as a fund house has a strong track record of good performance and many of their funds are top performers in their respective category. While it is true that Reliance Retirement Fund has given negative returns in the past year, short term performance is driven by a variety of factors that may not be relevant in the long term. One should wait for the fund to get a little seasoned and then decide accordingly, based on the performance of the fund.

As regards the Motilal Oswal MOSt NASDAQ – 100 ETF, you should note that NASDAQ – 100 ETFs have been among the best performing ETFs in the US in the past one decade. The top 100 companies of NASDAQ are wonderful companies. The NASDAQ – 100 index has matured from an index of growth tech stocks to an index of large cap growth stocks which also have good dividend yields. Whether the Motilal Oswal MOSt NASDAQ – 100 ETF will beat the BSE – 100 is another question, but this ETF will help you get international exposure to your portfolio, which is always useful.

comments powered by Disqus
You haven't found the answer for your queries? Do post your queries to us.

© 2016 Advisorkhoj - A Gamechanger Business Services (I) Pvt. Ltd. Brand - All Rights Reserved