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I am 19 and recently started investing via mutual fund SIPs. Am I on the right track?

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Last Updated: Jun 30, 2020, 09.55 AM IST
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Summary The investment in the mentioned mutual fund schemes are good long-term investments and you should continue with them. However, focus on three important things as well.

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"Diversify your investments across sectors and investment houses."
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I am 19. I invest Rs 500 from my monthly pocket money into five mutual funds -- ICICI Prudential Value Discovery, ICICI Prudential Infrastructure, ICICI Prudential Bluechip, ICICI Prudential US Bluechip Equity and Nippon Power and Infra Fund Direct. I started these SIPs recently. Am I on the right track?

Adhil Shetty, CEO, BankBazaar says, "These are all good long-term investments and you should continue with them. Focus on three important things: First, save towards a goal. Once you know how much you intend to save and by when, you will have a clearer idea of how much to save every month. Monitor your investments periodically but do not take hasty decisions. Periodically check to ensure that the returns from your investment are in the expected range and take corrective action only after observing the fund performance for at least 6 months. Diversify your investments across sectors and investment houses. This is important because if one sector does not perform as expected, your returns are compensated by another sector and proper balance is maintained. Continue to invest regularly, and supplement your investment amount when you can."

I have been investing in mutual funds, NCDs and bank FDs in my daughter’s name since 2015 for her higher education and marriage. She completed her master’s degree from the US in 2019. I had taken an education loan of Rs 40 lakh to fund her studies. The original plan was that she will return after her MS. However, she has got a job there. Since 2015, I have also been filing her income tax returns. Should I redeem the existing investments in her name or should I continue with them to reach the planned amount? Also how should I file her tax returns now?

Ankur Choudhary, Co-Founder and CIO, Goalwise says, "Since your daughter is an NRI, her investments and tax filing should be done accordingly. Her new KYC status as an NRI should be updated in all her mutual fund folios and demat accounts. Also, any savings account should be converted to an NRO account. Thereafter one can continue investing as long as the source of investments is an account held in her name. Only a few MF companies currently accept investments from US-based NRIs. Your existing investments can remain as is. For FDs, you should go for NRE FD as that will be tax-free. For income tax filing, NRIs cannot file ITR 1 and she will have to file ITR 2 assuming she doesn’t have any business/professional income in India."
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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