I am investing Rs 8,000 per month in SIP for 10 months with 10% step up in the 10 mentioned funds. Will these schemes give me an annual return of 12%? My goal is to build a corpus of around Rs one crore. I am doing this for long term investment.
Sundaram Small Cap Fund
Sundaram Dividend yield Fund
Parag Parikh Flexi Cap Fund
PGIM India Flexi Cap Fund
Kotak Emerging Equity Fund
Invesco India Mid Cap Fund
DSP Mid Cap Fund
Aditya Birla Sun Life Low Duration Fund
Nippon India Balanced Advantage Fund
--Ashish Mishra
You are investing In too many schemes. You don’t need many schemes to achieve meaningful diversification and maximise returns. In fact, too many schemes often result in over diversification and dilute overall returns. Choose two or three schemes that match your investment objectives and risk profile. For example, if you are investing to grow wealth without too much risk and volatility, you can invest in a large cap mutual fund scheme. If you are willing to take more risk, you may invest in flexi cap mutual funds. We will not recommend risky options like mid cap, small cap, sector schemes and so on to new and inexperienced investor. We believe that new investors won’t have maturity to hold on and continue with their investments when risky investments start to fall or lose money. One should gain confidence and experience before investing in risky mutual funds.
Best Large Cap Funds to invest in 2022
Best Flexi Cap Funds to invest in 2022
You have not shared your investment horizon. So it is not possible to calculate how much money you need to invest to create a corpus of Rs 1 crore. Assuming an annual return of 12%, you need to invest around Rs 43,000 every month to create a corpus of Rs 1 crore in 10 years. If you want to make Rs 1 crore in 15 years, you need to invest Rs 19,819 every month. Assuming you have 20 years, you need to invest around Rs 10,000 every month. Rs 1 crore may appear large today but it will lose its value over a long period because of the impact of inflation. So, include inflation in your calculations.
We always use 12% annual returns in our calculations. This is based on the average annual returns stocks have offered over a long period. Remember it’s based on past returns. It may or may not hold true after 10 or 15 years. However, you can hope to get inflation beating better after-tax returns from stocks over a longer period.
