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How to save 1 crore in 5 years?

Funds and allocation percentages recommended by Kukreja: HDFC Sensex Index Plan (20%) Axis Growth Opportunities Fund OR Canara Robecco Emerging Equity Fund (15%) Parag Parikh Flexi Cap Fund (PPFAS) OR SBI Focused Equity Fund (15%) Kotak Balanced Advantage Fund OR Edelweiss Balanced Advantage Fund (30%)

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Prableen, what would it take for an investor to build a corpus of Rs 1 crore, in the most balanced way possible, in the current circumstances?

Prableen Bajpai: Whenever we are looking at building a corpus – five years being the time factor – what is important is the return expectations from the products which are picked, and the risk appetite of the investor. Someone may be comfortable with a 6-7% return; someone else may be a high-risk taker and is okay with taking an all-equity exposure. Broadly, it would depend on the risk appetite and comfort level of the investor. Based on that, we can create a portfolio. If somebody is looking at a low-risk sort of portfolio, or just about 6-7% returns, it would be broadly an all-debt portfolio for that person. Such a portfolio would actually require a huge amount, in terms of lump sum let's about Rs 70 lakh in the present day oblique about Rs 1.4 lakh as SIP. As you go higher, in terms of increasing your risk appetite, the demand in terms of what needs to be invested starts to go down, because you're taking a higher risk and your expected returns are going up. Broadly, here are the categories which can be combined and used in a certain permutation by investors based on the suitable risk appetite. One is the debt basket and there I have three funds, which are all index and passive strategies within the debt segment. This is a good time to take exposure to a five-year sort of an index fund in the debt space. We are in the month of March. So, it covers about six financial years, and indexation benefits would be higher. There is no credit risk in all of these, but there would be interest rate risk. All these three funds are target maturity, that is if you're holding them, whatever yield they are entering at today they get that – it is hovering around 6.2 to 6.5%. So, these three funds are the IDFC Gilt Fund, Axis Crisil fund which is investing in state loans, and the third one is the Edelweiss PSU Bond SDL Index Fund. The second category is broadly hybrid. Hybrid gives you a combination of debt and equity. I have picked the conservative hybrid category for someone who is only looking to take little exposure to equities, because it can go up from 10% to about 25% in equities. The two funds which I like are Kotak and Parag Parikh. One of the popular categories with a timeframe of about five years is the Balanced Advantage Fund category as well as the Hybrid Aggressive category. From here, one fund from Edelweiss and Mirae is what investors can look at.

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These are not hardcore recommendations. These are just suggestions for investors to look at and can give them decent returns. Edelweiss, during the March 2020 dip, had only fallen by 13%, while the category funds had fallen by about 32%. Even Mirae Asset has given no negative returns on a five-year rolling basis. Let's say somebody parks a bit of their funds in debt, maybe something in hybrid or a conservative debt space, and wants to take some exposure to pure equities. Some of the funds which I would suggest are the index funds – the Large Cap Index – this can be done by a market weighted index, the regular Nifty 50 oblique an equal-weighted strategy like DSP has. I am suggesting DSP because that is the oldest fund that we have in the equal Nifty space. Two active funds here are the Axis Flexi Cap and the Parag Parikh Flexi Cap. Again, these two funds have been consistent performers in terms of rolling return. International allocation still makes a great case and it's a good time to take some international exposure – maybe about 10% to 15% – depending on the risk appetite of the investor to go into global equities. The options here can be the Kotak Nasdaq 100 or Aditya Birla Nasdaq 100. A combination of these funds (can be looked at) and based on that, one can work out the returns. If somebody is investing 20% in pure debt, 30% in a conservative fund, and 50% in an equity fund, with the range of returns that I have taken, they can get a portfolio return of close to 10% with not a very high risk.

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