Tuesday Morning Queries (14th August, 2018)

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B Gopkumar - 14 August 2018

I will retire from the defence forces in 15 years and I need Rs 2 crore to settle down. I have invested in systematic investment plans in the following funds: ICICI Prudential Bluechip Fund – Direct (Rs 1,000), Kotak Standard Multicap Fund (Rs 2,000), L&T Emerging Opportunities Fund (Rs 2,500), SBI Small Cap Fund (Rs 2,000), Motilal Oswal Multicap 35 Fund (Rs 2,000), Axis Long Term Equity Fund (ELSS) (Rs 4,000), ABSL Tax Relief 96 Fund (ELSS) (Rs 8,500) and Parag Parikh Long Term Equity Fund (Rs 2,000). Which funds should I continue for 15 years. Please suggest two ELSS funds for tax benefit, and whether I should continue investing in both of them or choose one.

All funds chosen by you for systematic investment plan (SIP) have good long-term past performance track record, except for Parag Parikh Fund. You can continue these SIPs. Investment of approximately Rs 30,000 per month can fetch around Rs 2 crore fund value after 15 years at 15per cent CAGR in line with average returns track record of equity markets since inception. You may further increase the amount in existing SIP or start new SIPs in other proven track record multi-cap funds from leading asset management companies (AMCs).

What happens to a National Pension Scheme account once a person moves out of India? Can I still contribute to it and withdraw funds at 60 years of age, if I continue to live outside India?

Yes, you can still contribute after moving out of India. You can also change the status of your account to non-resident Indian and continue your contribution. You can withdraw the funds after reaching the age of 60 years. You will need to buy an annuity of minimum 40 per cent of the amount and the balance 60 per cent will be credited to the bank account you have provided.

I am a 30 years old married professional with a high risk profile. I have taken a term insurance of Rs 1 crore and a family health insurance of Rs 15,000 annual premium. My goal is to retire after 20 years for which I will require Rs 5 crore. I will also require Rs 50 lakh for my child’s higher education after 20 years. I recently invested Rs 22,000 in six mutual fund schemes through SIPs: HDFC Small Cap Fund - Direct (G) (Rs 5,000), Axis Focused 25 Fund - Direct (G) (Rs 5,000), SBI Blue Chip Fund - Direct (G) (Rs 2,000), SBI Blue Chip Fund - Direct (G) (Rs 5,000), Motilal Oswal Long Term Equity Fund - Direct (G) (Rs 2,000) and Motilal Oswal Long Term Equity Fund (G) (Rs 5,000). I also invest Rs 1 lakh per year in fixed deposits. I can increase my SIPs by 10 per cent every year. Is my investment horizon in line with my risk profile and goals?

We can see that your existing SIPs are in large, small and multi-caps. Looking at your age, profile and goal horizon, we suggest that you increase your allocation in multi-caps through SIP. We cannot predict exact returns from equity markets, but considering an expected average return of 15 per cent per annum in line with index performance since inception, you can continue your existing SIPs to achieve your goals in the given time horizon. Alternatively, you may use SIP calculators available online for advance calculations.

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