I am going to opt for the following Mutual Funds and Index funds for Long Term Investment: 1) Bandhan Small Cap Direct Fund
2) Motilal Oswal Midcap direct fund
3) Nippon India Nifty 500 momentum 50 index Fund
4) CANARA HSBC Promise for Life (Nifty 50 Alpha Index Fund) - a ULIP Plan
5) National Pension Fund
Strategy behind choosing these investment Pattern:
From 1st to 3rd, High Risk and High Returns and Allocation amount is 50%
From 4th to 5th: To have balance and stability with low risk and allocation amount is 50%
I request to offer suggestions for betterment of investment
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U need to define exactly the terms like long term, risk, high risk,return, high return — for some long term may b 3 yrs, others 5, some other 10 yrs—- return expectations depend on opportunity costs ( as per munger)— for some alternate return source may b fd, others investing in real estate, rental yield, etc etc—— based on above permutations and combinations of various factors, advice varies—— other factors to consider includes ur source if income, its stability, dependants, ur financial security, etc—— financial advice is really personal—- the more information one divulges about ones situation, the greater the quality of recommendation——- its highly personalised and customised——-you may need to understand the whole financial spectrum of yours and explain it as much detailed as possible to get the best advice for yourself——
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I am not in favor of ULIPs. If one needs insurance, one should buy a term plan separately. Mixing insurance with investments is not a good idea.
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Yes as Chandragupta mentions ULIP is not recommeded don’t invest in it, just invest in an insurance plan if you require it, not a ULIP.
also not sure what your goal is for, but based on long term investment recommed you go for a flexi cap(normally significant portion has large cap, which provides safety during market downturn), either a small cap or midcap(don’t recommend both, as both are relatively volatile, but from these recommend midcap as compared to small cap it’s less volatile and there is small variation in the percentage returns compared to small cap) and invest in a debt fund.
This is just my recommendation of how i have invested, but at the end its your investment.
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A few points in random order:
- Would suggest sticking to a single Small-cap Index fund rather than opting for active funds. Had a look at the Bandhan Small Cap fund. It is quite diversified (around 100 or more holdings), so if you are investing for the long-term (5-10 year horizon), it is unlikely to yield any major alpha.
- The Motilal mid-cap fund does take quite a focused and concentrated approach with a lot fewer holdings, so I would suggest having a brief look over the invested companies and see their valuations/ growth prospects. It would make sense to go for an Active fund here.
- Index-based Smart Beta funds do lag behind quite a bit in terms of attrition of companies. If you are looking at smart-beta funds, you can consider the Nippon India Active Momentum Fund or the CapitalMind Flexi Cap Fund. Both are recently launched, hence not much data on past performance is available. The former is solely momentum-based, while the latter is a multi-factor beta fund. However, they will attract higher fees, so do keep that in mind.
- I personally do not advocate ULIPs as a product themselves, so I would be against that.
- Would definitely suggest keeping a Flexicap or Large Cap fund to mitigate volatility during drawdowns.
Disc.- Not Investment Advice.
@Thummaginjala_Sreeni
My 2 bits, you seem to have taken up current hot ones, would suggest you make a long term commitment
A) Select Funds with Downside Protection- for Small Cap - I would suggest Nippon/Tata/Edelweiss - I invested with both Nippon and Tata
B) For MidCap - Motilal is good choice, but again same point as above, HDFC Mid Cap has better downside protection. Disclaimer: I have both Motilal and HDFC.
C) If you are doing active, then why go for strategy also. But if you want to do strategy; then would suggest being strategic about it - Equal Contribution to Nifty 500 Momentum 50 and Nifty 500 Quality 50 (much better returns overall with great downside protection)
D) Why ULIP, for Tax Saving?
E) NPS Tier1 - Definitely Yes - Even if just for the Tax Saving.
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Instead of going after fancy names and complex themes, IMHO, we need to keep the things as simple as possible :
Core Portfolio (for long term 7+ years - SIP is the preferred mode of investment) :
1.One good FlexiCap Fund
2.One good LargeCap Fund
3.One good Large & Mid cap Fund
4.One good Balanced Adv Fund (has got around 35% portion of Debt)
5. One good Value/Contra Fund
That’s it… (of course one can add/change a Debt oriented / hybrid fund if one is not comfortable with 100% equity allocation)
Additionally, one can have a satellite portfolio comprising mid cap, small cap and thematic funds (like pharma, banking & fin, Defense funds etc).
The composition of the above portfolio will change depending on one’s investment horizon, Life goals and risk taking ability. Better to consult a CFP for complete financial health check up.
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Great Point @Advait_6270
In fact for above conundrum, I would suggest moving entire NPS portfolio to Debt. That ways when you close shop at 60, 60% is Tax Free (IMLK-Debt Funds are taxed at Slab ) and balance into another Debt Fund in Form of Annuity.
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Sir, I am Govt Employee. As on date, 30% of NPS fund is invested into Equity, 20% of NPS fund into Corporate Bonds and 50% of NPS fund into Govt Securities. The investment pattern is based on my age. NPS Scheme generating about 9% returns only. So i can take risk to invest remaining savings (apart from NPS) into high risk and high return schems
