Ask ET Mutual Funds: What will be my returns after 20 years?

My son is 30 years old, want to invest Rs 5,000 to Rs 10,000 per month for a minimum five years. Where should he invest through SIPs in mutual funds? What will be tax liability on maturity and what will be return? Also, if these funds are again reinvested in the same for 20 years with break up for five years, what will be my total return after 20 years.

--Rajeev Garg

Your son is lucky to have father like you who is ready to look after his investment needs.

Since your son is investing with a horizon of over five years, he can invest in equity mutual funds that invest in stocks. These funds have the potential to offer superior returns than other assets over a long period.

Your son can take look at our recommended equity mutual fund portfolios. He can choose a portfolio based on his risk profile and SIP amount.

Since your son is investing for more than five years, the returns from the investment would be tax free. If equity mutual funds are sold after a year, returns are treated as long-term capital gains and currently they are not taxed.

Mutual funds do not guarantee any returns. However, as said before, they may offer superior returns over a long period. For example, largecap mutual fund schemes have offered 16.59 per cent over the last five years, 10.09 per cent in the last 10 years. Sure, the past performance may not be repeated. However, you can assume double-digit tax-free returns on your investment.

The last part of your query is not clear.


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