Want to invest in mutual funds but don’t know how to go about it?

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Get all your mutual fund related queries answered by our expert, Pankaj Mathpal, founder and managing director, Optima Money Manager, on our show Mutual Fund Corner.

Q: 21-year-old Raj Yadav writes to us from West Bengal. Started investing from December 2018. Currently, I am investing Rs 2,000 in ICICI Prudential Large Cap, Rs 1,000 in HDFC Small Cap and Rs 1,000 in Mirae Asset Multi-Cap. Also from April 2019, I am planning to invest Rs 1,000 in Invesco Contra Fund and Public Provident Fund. I liked the concept of contra funds, so I want to invest there. So shall I start investing there?

Goals to achieve:

Long term: I want to accumulate more than Rs 60 lakh in nearly 10 years. More than Rs 2 crore in 20 years.

Short term: Is it possible to accumulate more than Rs 5 lakh in the next 3-4 years?

If the goals are feasible or not, how much closer can I get to? So I want to know how much I need to invest to achieve the above goals and every year how much do I need to increase. Please let me know individually for both goals.

A: To take benefit from a contrarian style of investment, you can consider investing in Invesco India Contra Fund. The scheme has a good performance history. It may not be possible to accumulate Rs 5 lakh in 3-4 years with your current investment. Assuming CAGR (Compound Annual Growth Rate) of 12 percent, you can expect around Rs 2.50 lakh in four years with your current SIP. Moreover, diversified equity schemes are more suitable for long term (minimum five years).

For your short term goals, invest in some hybrid schemes. To accumulate your desired goals, you should increase your SIP amount from time to time. Add one mid cap fund in your portfolio. Recommended scheme: ICICI Prudential Mid Cap Fund and Kotak Emerging Equity Fund. Assuming CAGR of 12 percent to accumulate Rs 60 lakh in 10 years and Rs 2 crore in 20 years, you will have to start cumulatively with Rs 21,000 per month and increase the amount by 10 percent every year.

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