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How should I invest to create a corpus of ₹23 lakh in 3 years?


I have a short-term goal to accumulate 23 lakh for the down-payment of an apartment. I can invest 45,000 in mutual funds (MF) per month for three years. Please suggest some good MF schemes.

        —Vivek G Ravindranath 


To calculate the amount that you need to invest regularly to accumulate your desired corpus, let us assume an annual rate of return. If we assume a rate of 9%, then at the end of three years, you would have a corpus of 18.5 lakh. If we assume 10%, that will yield close to 19 lakh, while a conservative assumption of 8% will result in 18 lakh. So, that is the range of returns expectations that you can have.

Coming to funds, given the short-term duration of your investments, you need to moderate your portfolio risk so that market fluctuations do not pose you a timing risk at the time when you need your money back. You can invest 25% of your monthly corpus in a Nifty index fund such as UTI Nifty Index Fund. You can go for a balanced fund such as ICICI Prudential Balanced Advantage Fund for another 50%, and a debt fund such as HDFC Corporate Bond Fund for the remaining 25%. 


I want to know if it is a good time to invest in mutual funds through SIPs. What funds should I invest in? I am 26 years old.

—Name withheld on request 


Systematic investment plans (SIPs) are long-term investments in the equity market. Since they are not made in bulk at any one given time, the risk of these portfolios as well as their potential returns is spread out over multiple  instalments. So, there is no bad time to start investing through SIPs. You can start it any time and let market volatility do its magic in terms of averaging your investment costs. As a young person with, hopefully, a long-term investment horizon, your portfolio can take considerable risks and hence be overweight on equity funds. The key is to select good equity funds, and a curated lists of good funds such as Mint 20 list of funds can help you with your choices.

Srikanth Meenakshi is co-founder at PrimeInvestor.

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