Will I be able to create Rs 2 crore with these mutual funds?
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Axis Midcap Fund: Rs 10,000 per month
SBI Small Cap Fund: Rs 15,000 per month
Kotak Standard Multicap Fund: Rs 10,000 per month
ICICI Prudential Bluechip Fund: Rs 10,000 per month
Franklin India Low Duration Fund: Rs 10,000 per month
Can you please suggest if I am on the right track? Or do I need to change anything? I can take high risk as I am investing for a long period.
You are currently investing Rs 55,000 per month. Assuming that you are continuing to invest Rs 55,000 per month at an annual return of 12 per cent on your investments, you would be able to create a corpus of around Rs 88.84 lakh in eight years. As you can see, you have an extremely ambitious target in mind and you have hardly eight years to achieve it. If you want to create Rs 2 core in eight years, you will have to invest around Rs 1.24 lakh per month. Another way to achieve the goal would be to increase your investments regularly whenever your income goes up. You may also try to cut down on your discretionary expenses to boost your investments.
Do not assume that you can take very high risk simply because you are investing for a long period. Risk-taking ability is based on your financial situation and mental make up. Even if you are financially ready to take higher risk, you need not be mentally prepared for it. So, re-evaluate your risk profile.
It is not clear why you have chosen a low duration scheme to achieve your long-term financial goals. When you are investing for a relatively long period like eight years, you may consider investing in equity mutual funds based on your risk profile. You are currently investing in a mid cap scheme, small cap scheme, multi cap scheme, large cap scheme, and low duration scheme. Mid and small cap schemes are suitable for aggressive investors with a high tolerance for risk, while multi ca schemes are meant for equity investors with a moderate risk profile. Large cap schemes are ideal for conservative equity investors.
Adding every mutual fund category to your portfolio is not diversification. Diversification should also include your investment objective, risk profile and return expectation. If you are new to mutual funds, seek the help of a mutual fund advisor.