InvestorQ : I am a retired individual. I want to invest in mutual funds to make my money grow. Can you suggest a few funds?
Suresh Patil made post

I am a retired individual. I want to invest in mutual funds to make my money grow. Can you suggest a few funds?

Pratik vyas answered.
4 years ago

It is true that in the equity market, its best to start investing early. This is because with age on your side,

you stand to benefit the most from the magic of compounding. But does that mean that you shouldn’t invest in mutual funds at this age.

Among most asset classes, only equity has given significant returns in the past few years.

Thus, you should invest in equity mutual funds in order to see your money grow.

You could invest Rs. 10 lakh in a large-cap fund and Rs. 5 lakh each in a multi-cap and a balanced advantage fund. I’d suggest you use systematic transfer plans or STPs to invest in equity funds over a one-year period.

An STP is a plan that allows mutual fund houses to periodically transfer a certain amount or switch (redeem) certain units from one scheme and invest in another scheme of the same mutual fund house. Thus, at regular intervals a particular amount you choose is transferred from one mutual fund scheme to another one of your choice. STP comes in handy when you want to deploy funds at regular intervals.

Let us understand STP with an example.

If you want to invest Rs. 2 lakh in an equity fund using STP, you should opt for a low-risk debt fund like an ultra short-term fund or a liquid fund. After investing Rs. 2 lakh in a debt fund of your choice,

you should decide a fixed amount that will be transferred to equity fund either daily, weekly, monthly or quarterly.

If you opt to transfer Rs. 10,000 every month, it will take 20 months to complete the transfer of lumpsum amount from debt fund to equity fund. You will earn interest on the debt funds while your exposure to equity is also done in a staggered manner thereby minimising risk and maximising returns.

Now coming to fund options. For large-cap investments, you may choose from any one of the following funds:

- SBI ETF Nifty Next 50 Fund

- Axis Bluechip Fund

- ICICI Pru Bluechip,

- JM Core 11 Fund

- IDBI Nifty Junior Index Fund

For good multi-cap funds you can choose from:

- Tata Retirement Savings Fund - Progressive Plan

- Axis Focused 25 Fund

- Motilal Oswal Multicap 35 Fund - Regular Plan

- Aditya Birla Sun Life Equity Fund

- SBI Focused Equity Fund

For the balanced advantage component, you may invest in:

- HDFC Balanced Advantage Fund

- ICICI Prudential Balanced Advantage

- Motilal Oswal Dynamic.

You should invest in the direct plans of any of the aforementioned funds as they will help you generate higher returns vis-à-vis the regular plans.