Please advise for investing Rs 2 Lakhs for 5 years horizon
Ans: I have no idea about your age, future financial goals, your risk profile and your existing investments. So, while giving one suggested solution to you, I’m assuming that you’re young (less than 40 years of age), are open to equity investing, have a long-term horizon of at least 5 years or more and would have the nerves to not get unduly perturbed if markets go temporarily down. Typically, investors change their investing horizon as per the market conditions – if markets remain good, they’re long-term players, if markets turn down, they start exiting in panic and become short term players. Please remember that markets will always give great returns only if you ‘spend time in the markets, rather than try timing the market’.
So, I’m just giving you a high-equity portfolio which is a long term portfolio but needs to be reviewed and maybe rebalanced every year. I’m also assuming that you have no other funds or equity.
The portfolio that I would suggest is:-
1. Large Cap - 20%
2. Flexicap – 20%
3. Midcap – 20%
4. Aggressive Hybrid – 20%
5. Small Cap – 20%
In the above portfolio, the last, Small Cap category, will be very volatile and you will need to get used to it. If you’re not up to its gyrations, stick to first four with 25% allocation each.