Will these mutual funds help me to create Rs 50 lakh?

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I am 27 years old. I am investing Rs 5,000 per month in mutual funds through SIP:
Mirae Asset Large Cap Fund (Direct, Growth): Rs 1,000
Kotak Dynamic Bond Fund (Direct, Growth): Rs 1,000
Axis Bluechip Fund (Direct, Growth): Rs 1,000
  • 7.22%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.7 YearsTime taken to double money
  • 13.13%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 4.11 YearsTime taken to double money
Parag Parikh Long Term Equity Fund (Direct, Growth): Rs 1,000

SBI Small Cap Fund (Direct, Growth): Rs 500
Mirae Asset Tax Saver Fund (Direct, Growth): Rs 500
I will continue with my investments for the next 20 years. I need Rs 50 lakh after the period of 20 years. Am I investing in the right funds? My risk profile is high.

-Elanginan Dharmarajan


A few quick observations. You are investing in too many schemes. When you are investing Rs 5000, you just need one scheme. Investing in every possible category is unlikely to help you to create wealth. It often drags your return down or increases your risk. For example, you have stated that you have an aggressive risk profile. But you have investments in two large cap funds and a dynamic bond fund.
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Do not assume your risk profile. Take an online quiz to find out your real risk profile. Next, choose a mutual fund scheme that is in line with it. Add more schemes only when you are investing a very large amount.

We always tell our readers to not choose round figures like Rs 50 lakh or Rs 1 crore for their future goals. There is something called time value of money. Your money loses value every year because of the impact of inflation. In other words, if you need Rs 50 lakh for a goal today, it will cost around Rs 1.20 crore after 20 years, after accounting for an annual inflation of 6%.

For more read: Why Rs 1 core will not help you retire comfortably.
If you are not clear about the basics of mutual funds, hire a good mutual fund advisor. Ask your friends and colleagues for reference.

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