I have Rs 30,000 which I plan to invest in ICICI Prudential Focused Bluechip Equity and Invesco India Contra fund to build Rs 1 crore corpus for my son 8 year every month from now. Please comment if my fund selection is in line with my goal.
Ganapathi Venkatraman, Chennai
To understand the power of systematic investment, let us illustrate it with an example – a monthly investment of Rs 60,000 earning an annualised 12 per cent return will accumulate Rs 96.91 lakh after 8 years, which is about the time when you will need money for your son’s education in high school and then college. The same investment will swell to Rs 1.11 crore if it earns an annualised 15 per cent for the same time frame.
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The funds that you have selected are good and have the potential to achieve your goal. All you need is to double what you wish to invest from the current Rs 30,000. Make sure you review the performance of the fund that you invest in periodically to make sure that you are on track towards the goal to create a corpus for your son. By reviewing periodically you make sure that you can get into any course correction if needed and also evaluate the progress made by the investments. As you approach closer to the goal year, start moving the investments into safer debt options so that you do not experience any surprises owing to stock market volatility.
