MF Query Board
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As you have mentioned, you have 25 years to accumulate the desired amount of Rs. 80 lakh. However, you have not provided the financial goal for which you intend to save, neither you have given us your risk profile. Also, you have not mentioned whether or not the amount of Rs. 80 lakh that you wish to accumulate is inflation-adjusted. So, to begin with, we would assume certain things. We assume that the goal for which you need Rs. 80 lakh is a need which you cannot avoid. Another assumption made is the amount you mentioned is inflation-adjusted and your risk profile is moderate. The rate of return assumed is 10 per cent, considering you are a moderate risk taker. Now, based on these assumptions and the information provided by you, we need to calculate the actual SIP required. So, the SIP required comes to Rs. 5,979.56 which can be rounded off to Rs. 6,000. This is what you are planning to invest. It is to be noted that we have assumed 60 per cent investment in equity and 40 per cent investment in debt, which you need to periodically rebalance and, as you reach near your goal, you need to start moving some part of the equity to debt. Now, to answer your question whether or not the portfolio as decided by you can help you achieve your goal. Yes, it can help you achieve it, but you would be taking risk that is way higher. Having said that, you may be exposed to high volatility which, if your goal is a need like child’s education, marriage or your retirement, then it is not suitable. For such goals which are your needs, a combination of debt and equity is essential. However, if your goal is a want, then you can go ahead with your existing portfolio.
Your risk profile and tenure would decide whether to invest in liquid funds or ultra-short duration funds. If you wish to park money for a period of three to six months, then it makes sense to invest in ultra-short duration fund, as the returns these funds are capable of generating would be better. Liquid funds, on the other hand, cannot invest in bonds or papers having a maturity period of more than 91 days. Since ultra-short duration funds may take some risks, at times there is a probability of loss. But materially, the probability of loss is relatively less. So, if your investment tenure is three months to six months, then invest in ultra-short duration funds. However, if your investment duration is less than 91 days, then invest in liquid funds. The recent changes made by the SEBI (Securities and Exchange Board of India) may make liquid funds even more safer.