I am 36 years old and my wife is aged 34. We intend to invest ₹40,000 monthly ( ₹20,000 each) in mutual funds. Currently, I have exhausted the investment quotas for the year in both public provident fund (PPF) and National Pension System (NPS). Additionally, over the past year, I have been allocating ₹2,000 per month to the Parag Parikh Flexi Cap Fund and ₹1,000 per month to the PGIM India Flexi Cap Fund. However, my wife has yet to initiate her mutual fund investments. Considering our moderate risk profile and a willingness to invest for 7 years or more, what would be a suitable asset allocation mix for us?
—Name withheld on request
With a moderate risk profile and a 7 plus year investment horizon, we suggest the following asset allocation: 60-80% in equity mutual funds, 10-20% in fixed income through mutual funds, bonds, and fixed deposits, and 10-15% in gold through sovereign gold bonds.
Regarding equity mutual funds, we recommend emphasizing large-cap funds and hybrid funds, with a portion allocated to mid-cap funds. Based on this, here are our suggested funds for investment:
ICICI Prudential Balanced Advantage Fund
HDFC Balanced Advantage Fund
Parag Parikh Flexicap Fund
Kotak Emerging Equity Fund
ICICI Prudential Nifty 50 Index Fund
Mirae Asset Large and Midcap Fund
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In the category of large-cap funds, we prefer index funds due to the consistent performance when compared to actively managed funds.
Additionally, we strongly advise maintaining an emergency corpus equivalent to six months of your salary or income. This fund can be held in liquid or ultra short mutual funds. Also, if not already in place, consider obtaining medical and life insurance to ensure financial protection for your family in case of unforeseen events.
These suggestions are based on the information provided and certain assumptions. For personalized advice, we recommend consulting a financial adviser.
Vijay Kuppa is CEO of InCred Money.
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Updated: 23 Nov 2023, 12:37 AM IST