Should I invest Rs 5 lakh in these mutual fund schemes?

I am a new investor and I live in US. I will be in US for another three years and in that time period I would like to invest Rs 40,000 per month via SIPs. After that I would like to invest Rs 10,000 per month for another 10 -12 years. I would also like to invest Rs 5 lakh in lumpsum for eight to 10 years. An investor friend has suggested the following schemes to start monthly SIPs worth Rs 40,000:
1. ICICI Prudential Balanced Advantage Fund: Rs 6,000 (short term)
2. Reliance Regular Savings Fund- Balanced: Rs 6,000 (short term)
3. DSP BlackRock Equity & Bond Fund: Rs 6,000 (short term)
4. HDFC Prudence Fund: Rs 6,000 (short term)
5. ICICI Prudential Balanced Fund: Rs 6,000 (short term)
6. Canara Robeco Emerging Equity Fund: Rs 5,000 (long term)
7. Reliance Small Cap Fund: Rs 5,000 (long term)

For lumpsum investment of Rs 5 lakh, he suggested the following schemes:
1. Aditya Birla Sun Life Balanced '95 Fund: Rs 2,50,000
2. HDFC Prudence Fund: Rs 2,50,000
Can you help me in making a decision? Other than this, I have Rs 6 lakh in a fixed deposit. I also have a home loan of Rs 7 lakh. What would be the best options for me? Once I return to India, my salary would be around Rs 60,000 a month. Now I can save around Rs 1 lakh every month.
-- Shankar

Rishabh Parakh, Advisor, Money Plant Consulting, responds:

Out of the schemes suggested by your friend, 75 per cent are balanced (equity+debt). Only 25 per cent has been allocated towards pure equity schemes. If you invest via SIPs for eight-10 years, you can go for more equity funds.

You can invest 25 per cent in balanced funds and the rest in pure equity schemes to take advantage of the long-term horizon and to create wealth. You can continue your investment with a lesser amount via SIPs once you come back to India.


Since you are a new investor, you may want to diversify your portfolio by investing in largecap and midcap funds. You may avoid smallcap funds in the initial phase. Once you are comfortable with how mutual funds work, then you can take more risk. Also, as you are in the US, you are allowed to invest only in select fund houses.

With regards to your lumpsum investments, you may want to invest in pure equity funds than balanced funds. Since you have an FD and a home loan, do a complete financial planning and then take an informed decision.