How to create a corpus for downpayment for a house?

My wife and I are 26 years old, and we are CAs. We want to retire by 60. We are currently investing Rs 20,000 in mutual funds and intend to enhance the investments to a total of Rs 50,000 per month. Our goal is to create an initial corpus for downpayment for a house in 4- 5 years. Further, we intend to create a sufficient retirement corpus. We are thinking to invest in these schemes:

ICICI Prudential Bluechip Fund: Rs 10,000
ICICI Prudential Equity & Debt Fund: Rs 3,000
Mirae Asset Emerging Bluechip Fund: Rs 8,000
Tata Equity P/E Fund: Rs 7,000
SBI Magnum Multicap Fund: Rs 3,000
--Akshay Doshi

First, you should always quantify your long-term financial goals and provide for inflation to get a realistic target. Choosing a round figure or whatever you could save and invest may not be enough to take care of your financial goals.

Second, you have chosen equity schemes to take care of the downpayment you need to make to purchase a house in four to five years. This is not a great strategy. You should invest in equity mutual fund schemes, including aggressive hybrid schemes, only if you have an investment horizon of five to seven years. Equity can be risky and volatile in the short term. Also, it is not easy to recoup your losses when you have a short investment period.


If you are investing for four years, you should stick to conservative hybrid schemes. These schemes invest most of the corpus in debt and a small part in equity (10-25 per cent) instruments.