I am 24 and working as a lecturer in a college and can save Rs 5,000 a month and want to invest in shares and mutual funds. I want to have Rs 10 lakhs ten years from now; what shares and mutual funds should I invest now to build this sum?
Santhosh Kumar, Kochi
You are at the right age to start investing regularly through SIPs in mutual funds which will help you benefit from the power of compounding and cost averaging when investing through SIPs. For a new investor, we suggest investing in a balanced fund such as HDFC Balanced, ICICI Pru Balanced or SBI Magnum Balanced, which are all suitable for a first time investor. All the three funds make it to the OLM Elite Beginner’s list and have a long-term proven performance track record to invest in.
Start investing in any one of these funds and observe how the investment turns into units and performs over the next six months. This way, you will learn how mutual fund SIP investments work. For instance, if the fund earns 12 per cent annualised returns over the next ten years – your Rs 6 lakh cumulative investment will be worth Rs 11.6 lakh, which is more than what you wish to accumulate. These returns are possible because the fund has the capability to post such returns.
