Where to invest to build a corpus of Rs 12 lakh in 22 months

Query: I want to build a corpus of Rs 10-12 lakh in the next 20-22 months. I can invest Rs 45,000 per month towards this goal. Please suggest where to invest.

Jayant R. Pai, CFP and Head of Marketing, PPFAS Mutual Fund replies: You will need to earn a return of 19.68% per annum to build a corpus of Rs 12 lakh in 22 months. While equity mutual funds have given stellar returns over the past few years, it would be optimistic to expect 20% return.

Assuming a more realistic return of 12% per annum, you can expect to amass around Rs 11.15 lakh. However, given your short time frame, it is not advisable that you invest in equity mutual funds, as there is a higher chance of capital loss. Other options like bank recurring deposits or liquid funds can earn pre-tax returns of 6%-7.5% per annum. Assuming 7% return per annum, you can expect to build a corpus of around Rs 10.6 lakh in 22 months.

Query: I am a retired senior citizen and have been investing Rs 7,500 per month each in Mirae Asset India Equity Fund and SBI Bluechip Fund and Rs 5,000 per month each in Aditya Birla Sun Life Frontline Equity Fund, Mirae Asset Emerging Bluechip Fund and L&T Emerging Business Fund. Given that funds are being reclassified, do I need to change my schemes?

Rahul Parikh, CEO, Bajaj Capital replies: Fund reclassification is a positive move to bring the uniformity in the characteristics of similar type of schemes launched by different mutual funds. As far as your portfolio is concerned, there is no change in the fundamental attributes of the funds that you hold. There is just a name change and Mirae Asset India Opportunities Fund is now Mirae Asset India Equity Fund. Looking at your age, however, it is best you refrain from investing in the small-cap category, so you may choose L&T Large and Mid-Cap Fund instead of L&T Emerging Business Fund. The other funds chosen by you are quite good and you may continue investing in them.

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