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, Coimbatore
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 ICICI Pru Balanced and HDFC Balanced. Both have a long history of performance to base the investment on.
Make a start when investing in these funds and after six months of investing, you will be able to understand the way mutual fund investing works and how your investments have performed; you can then move to invest in other funds based on your risk profile from the OLM Elite list and invest for the long run.
As for your goal, an investment of Rs 5,000 a month for the next ten years will accumulate Rs 11.61 lakh if it earns an annualized 12 per cent return or Rs 13.93 lakh if it earns an annualised 15 per cent return, which is more than what you wish to accumulate.
