If you can invest Rs 50K every year, here's what you can do
Radhika Gupta of Forefront Capital Management advises investors to go in for the SIP route or the STP route as investment options. She also suggests funds one can allocate his money to.
Below is the transcript of an intercation with Radhika Gupta and a few investors on CNBC-TV18. Also watch the accompanying video.
Q: If an investor can invest Rs 50,000 per year and is willing to invest more in equities, what do you think should be the best plan for him? Do you think SIP would be the best way possible, mutual funds? What would be your advice?
A: If he has got a lump sum corpus what I suggest is that he use the SIP or the equivalent STP route where you put money through mutual funds through an STP. You keep earning interest and then every month a certain amount is put in to average the market value. So it’s called an STP, very similar to an SIP. If he has a number of funds, he should add Rs 4,000 plus to these SIPs a month and that will take it to Rs 50,000 and consolidate among three funds - one midcap fund, one large cap fund and one gold fund in a 75-25 kind of ratio. Some funds I would recommend for him on the large cap side would be Franklin Bluechip or HDFC Top 200. On the midcap side, ICICI Discovery or an IDFC Premier and then on the gold side HDFC Gold.
Q: If the investor wants to invest Rs 3,000 per month and is willing to invest in equities, What would be your suggestion?
A: Two alternatives for him depending on how much risk he wants to take. If he wants to be a more risky investor then he can go for a large cap equity fund. At least Rs 2,000 I think should go into a large cap equity fund. The recommended funds would be Franklin Bluechip, ICICI Bluechip and HDFC Equity for him. I do recommend that if he is investing in equities, just to hedge his portfolio a little bit, he should keep a small gold allocation. If he wants to do a little less risky route, he can choose a balanced fund from either ICICI or something like HDFC Prudence which has a 60-40 equity-debt split will work. So he is a little more assured in terms of return and he doesn’t get hit with large drawdowns.