I want to start a SIP for my son who is 21 years old. This is for 10000 per month with regular top ups for a duration of about 30 years. Which category of mutual fund would be advisable for this? And what kind of returns can be expected in percentage terms in this Thank you Akhilesh

Ans: Hello and thanks for writing to me. As your goal is capital appreciation and wealth creation over the long term, you can consider starting monthly SIP' of Rs.1,400 in each of these funds:

1-DSP Quant Fund
2-Edelweiss NIFTY 100 Quality 30 Index Fund
3-SBI Focused Equity Fund
4-SBI Magnum Global Fund
5-UTI Focused Equity Fund

Ans: Given your long-term investment horizon of 10-15 years and your willingness to invest Rs. 2000 per month, you can consider investing in a diversified equity mutual fund. These funds typically invest in a mix of large-cap, mid-cap, and small-cap stocks, offering growth potential over the long term while spreading out risk.

Look for funds with a proven track record of consistent performance and a fund manager with a strong investment strategy. Some suitable options may include diversified equity funds with a focus on growth and a history of delivering competitive returns relative to their benchmark indices.

Remember to conduct thorough research or consult with a financial advisor to ensure the fund aligns with your risk tolerance, investment goals, and time horizon.

Ans: As an 18-year-old looking to invest Rs 2,500 per month through SIP (Systematic Investment Plan) and aiming to redeem the investment at age 55, you have a long investment horizon ahead of you, which is great for investing in equity mutual funds. Equity mutual funds have historically provided higher returns over the long term compared to other asset classes like debt or fixed deposits.

Here are the steps you should consider:

• Risk Profile Assessment: Understand your risk tolerance. Since you're young and have a long investment horizon, you can afford to take higher risks. Equity mutual funds are more volatile in the short term but tend to offer better returns over the long run.
• Asset Allocation: Consider a diversified portfolio of equity funds to spread out the risk. You may also allocate a smaller portion to debt funds or other conservative options for stability.

Types of Mutual Funds:

• Large-cap funds: These invest in large, well-established companies with a proven track record. They are relatively less risky compared to mid-cap and small-cap funds.
• Mid-cap and small-cap funds: These invest in mid-sized and small-sized companies, respectively. They have the potential to offer higher returns but are riskier.
• Multi-cap funds: These invest across market capitalisations and offer diversification.
• Index funds: These mimic a particular market index, such as the Nifty or Sensex. They have lower expense ratios but may offer slightly lower returns compared to actively managed funds.
• Sector funds: These invest in specific sectors like technology, healthcare, etc. They can be riskier as they are heavily dependent on the performance of a particular sector.
• Historical Returns: It's important to note that past performance is not indicative of future results. However, historically, equity mutual funds in India have delivered annualised returns of around 12-15% over the long term. Your actual returns may vary based on market conditions.

Regular Review: Regularly review your investment portfolio and make changes as needed based on your financial goals, risk tolerance, and market conditions.

Professional Advice: If you're unsure about selecting mutual funds, consider seeking advice from a financial advisor who can help you choose funds aligned with your goals and risk profile.

Given your investment horizon of 37 years and historical market performance, you could expect substantial growth in your investment over time. However, it's essential to remain disciplined and continue investing regularly, regardless of short-term market fluctuations.

It is impossible to predict the exact return you can expect over 37 years. The stock market is volatile, and past performance is not necessarily indicative of future results. However, historically, the Indian stock market has provided an average annual return of around 12-14%. This is just a historical average, and your actual returns may be higher or lower.