Ask ET Mutual Funds: Suggest a good fund for my retirement

I am 24 years old. I earn Rs 25,000 per month. I have a PPF account (Rs 5000/month) and an SIP in SBI Bluechip (Rs 2000/month). Now, I want to invest Rs 2,000 per month to save for my retirement. Suggest me a good fund. Also, should I continue with the PPF?

-- Subrata Biswas

Harpreet Singh, Certified Financial Planner, responds:


Since you want to create a retirement corpus and have a long-term view, you can start an SIP in a good midcap fund. PPF is a good option as it is currently giving a good, safe, tax-free return of 8 per cent. However, considering your age, you must have higher exposure in equity mutual funds. Equity schemes will give you higher returns than PPF if invested for a long term. Moreover, PPF returns have been declining in the past decade and the trend is most likely to continue with expected continuity of softer interest rate regime in the foreseeable future. So, I recommend you to bring your investment in PPF down to 3,000 per month and add the same to the existing SIP in the large cap fund or start a new SIP. This will bring the equation to Rs 3000 in debt and Rs 6,000 in equity, which is a good ratio.

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