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I want to build a retirement corpus. Am I investing in right mutual funds?

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

ET Online|
Oct 09, 2019, 01.02 PM IST
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for retirement
I am a new investor. I want to build a corpus for my retirement. I am 34 years old and my investment horizon is 25 years. I always go for direct plans.

I am investing Rs 100 per month in the following mutual funds via SIP:
SBI Bluechip Fund
ICICI Prudential Bluechip Fund
Reliance Large Cap Fund
SBI Large & Midcap Fund
Aditya Birla Sun Life Equity Fund
Reliance Small Cap Fund
ICICI Prudential Banking and Financial Services Fund

I wish to invest for 5 to 7 years or more, depending on the performance of the schemes. But I won’t stop my investment till 3 years.

Am I am on the right track or do I need to add more? Please suggest. I have been investing in mutual funds since June, 2019.
---Abhishek Mukherjee

Asish Modani, Founder, SLA Financial Solutions, responds:


You are investing in a lot of schemes. It will lead to overdiversification which may pull your returns down in the long run. It is not clear why you want to invest in these schemes for only 5 to 7 years when you have an investment horizon of 25 years.

You say you are a new investor but you want to invest in direct plans. Investors should go for direct plans only when they understand the mutual funds completely. You are investing Rs 100 per month in various mutual fund schemes and you have a long term investment horizon of 25 years. During this period, you will go through turbulent markets where 30 to 50 per cent of your value may get eroded. It might seem okay at this point, but you should have a clarity about your risk profile.

Track record only shows the past performance, not the future, So. investing just on the basis of the past performance is one of the most common mistakes made by investors.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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