Expert advice

Apr 16, 2012,15.59 IST

Invest wisely for long-term wealth creation

Inorder to achieve a long term goal of Rs 1.5-2 crore in the next 10-12 years, one needs to set aside at least Rs 68,000-70,000 per month by way of investing in SIPs or a lumpsum of Rs 25 lakh in fixed deposits, advises Lovaii Navlakhi of International Money Matters.

Below is an edited transcript of his interview on CNBC-TV18. Watch the accompanying video for more.

Q: I can invest Rs 50000 per month. I have already invested Rs 5000 per month by way of SIPs in  each of these funds - HDFC Equity, HDFC Midcap Opportunity, IDFC Premier Equity, DSP Blackrock Equity, Fidelity Equity and Franklin Prima Plus. I need to know whether I have chosen the right equity funds. I would also want to know what to do with the balance Rs 20,000. My target is from Rs 1.5-2 crore in 10 years time.

A: All the schemes are good but you have no exposure to large cap funds.  I would advise you to distribute the Rs 50,000 as follows: Rs 15000 in ICICI Focus Bluechip, which is a large cap equity fund; Continue doing Rs 10000 each in DSP Equity and HDFC Equity, which are multicap and then have Rs 7000 in IDFC Premier Equity and Rs 8000 in HDFC Midcap Opportunity. So essentially, stop the SIP in Fidelity Equity and Franklin Prima Plus.

The other question was that you need to achieve Rs 1.5-2 crore in the next 10-12 years to meet your children’s education and retirement goal. I think you will be slightly short with this amount if it earns you about 12% per annum. You mentioned that you have sufficient amount of FDs. If you have about Rs 25 lakh in FDs today that earns you 6% post tax then you will meet all your goals.

If you do not have that quantum and want to manage it on a monthly basis, then you need to increase the SIP amount from Rs 50000 a month to about Rs 68000-70000 a month inorder to meet your goals.

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