I am currently 35 years old and planning to start a Systematic Investment Plan (SIP) of Rs 20,000 per month starting January 2025. I am already investing in government-backed schemes like PPF and NPS. However, my long-term goal is to create a corpus of Rs 10 crore by the time I turn 60. Given India’s significant push towards green energy and the growing opportunities in this sector, I am particularly interested in exploring mutual funds that focus on green energy and sustainability initiatives. Additionally, I would like to diversify my investments by including equity mutual funds across small-cap, mid-cap, and large-cap segments to align with my financial goals.
(Name withheld upon request)
Reply by Rajani Tandale, Senior Vice President, Mutual Fund at 1 Finance
In the flexicap category of mutual funds, fund managers have the flexibility to invest across large-cap, mid-cap, and small-cap stocks based on potential opportunities. If the green energy sector shows significant growth prospects, a skilled fund manager will strategically include such stocks in the portfolio and make timely adjustments as needed.
On the other hand, investing directly in sector-specific funds, such as those focused on green energy, requires a more hands-on approach. Fund houses typically do not provide proactive advice on when to exit their sector funds.
Since sector funds are cyclical in nature, closely monitoring their performance becomes essential. This task is best handled by professional fund managers who have the expertise and resources to track and respond to market changes effectively. Attempting to manage sector fund investments on your own can result in mistimed decisions, undermining the purpose of your investment.
If you prefer a hands-off approach or lack the time to actively manage your investments, consider opting for large-cap index funds or flexicap funds. These options provide diversification and allow fund managers to make informed decisions on your behalf. Alternatively, working with a qualified financial advisor can ensure you receive timely advice and guidance tailored to your investment goals.
Providing specific fund recommendations without understanding your overall financial profile would not be prudent. A sound investment strategy starts with asset allocation, a critical component of financial planning. Asset allocation depends on several factors, including your financial needs, goals, risk tolerance, and investment horizon.
If you prefer a Do-It-Yourself (DIY) approach, it’s advisable to stick to index funds and flexicap funds. These options provide diversification and require less active management, making them suitable for self-directed investors. However, if you are serious about building a comprehensive financial plan, it’s best to work with a qualified financial advisor. An advisor can create a holistic plan that includes your existing investments, tax planning, emergency funds, and wealth-building strategies tailored to your specific goals.
(Views expressed by the tax/investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)