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Mutual funds to create a corpus for a house

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Last Updated: Jan 24, 2020, 02.25 PM IST
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I am a software employee, with Rs 55,000 salary per month. I am a beginner to mutual funds. I have started investing Rs 1,000 in Mirae Asset Tax Saver Fund (growth) from this month. Should I continue this fund and how much I need to increase my SIP amount and what mutual funds will be good for me? My age is 25 and my financial goal is to buy land and construct a house.
-Raja Shekar

First, you should try to find out the current cost of land in the area where you would like to build a house. Next, find out how much is the inflation. For example, if the land cost Rs 50 lakh today, it will cost around Rs 81.44 lakh after 10 years when you account for an annual inflation of 5%. Once you know this number (your target corpus), you can find out how much you need to invest every month to achieve it. In this case, you may have to invest around Rs 35,000 every month to create Rs 81.44 lakh at the end of 10 years. We have assumed an annual return of 12% for the calculation.

You are currently investing in a tax saving mutual fund scheme. Investments in tax saving schemes or ELSS qualify for tax deductions of up to Rs 1.5 lakh under Section 80C. If you want to claim tax deductions under Section 80C, you may continue with your investments.

If you are not clear about the basics of investments and mutual funds, you must seek the help of a mutual fund advisor.
(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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