Want to invest in mutual funds but don't know how to go about it?

Get all your mutual fund related queries answered by our expert, Harshvardhan Roongta, chief financial planner, Roongta Securties, on our show Mutual Fund Corner.

Q: 37-year-old Nara Thulasi Krishna writes to us from Andhra Pradesh. I have planned to invest Rs 17,000 per month in Value Fund - Invesco India Contra Fund; Rs 17,000 per month in Large Cap & Midcap Fund - Canara Robeco Emerging Equities Fund and Rs 17,000 per month in Large Cap Fund - Axis Bluechip Fund with a long term plan of my retirement. But now, I am opening these mutual fund schemes as three year SIP plan with a thought of continuing further till 20 years basing on my life situations. My considerations on choosing these schemes are Crisil mutual fund rankings June 2018, advise from my financial friend and past performance of these funds. Where to park Rs 20 lakh for long term as an emergency fund. Please advise.

A: The methodology adopted by you in creating your portfolio seems good i.e. looking at different parameters before shortlisting the scheme to invest into and thereafter, picking one scheme from each category of large cap, mid cap etc. However, some minor changes can be made. For a monthly investment of Rs 51,000, you can split it into five schemes instead of three to cover some more of the market.

You can invest Rs 10,000 each in IDFC Nifty Fund, which is an Index Fund (passively managed large cap index fund); Axis Bluechip Fund (Actively managed Large Cap fund); Canara Robeco Emerging Equity Fund (Large & Mid Cap Fund); ICICI Value Discovery Fund (Value Fund) and SBI Magnum Multi Cap Fund (MultiCap Fund).

On Taxation:

Short Term Capital Gains (STCG): For holding period less than one year STCG is 15 percent. For NRI's TDS at 15 percent + cess will be deducted at the time of redemption.

Long Term Capital Gains (LTCG): For holding period more than one year LTCG is 10 percent. TDS at 10 percent + cess will be deducted at the time of redemption.

Q: 60-year-old N Prasad writes to us from Hyderabad. What are the costs involved in shifting from high NAV deteriorating performance funds to more promising funds. How it's done in the case of direct equities. Whether it's advisable?

A: When you switch from one scheme to another the following will be the impact: i) Exit load: If you switch out of a scheme within the period for which there is an exit load, then you will be levied an exit load. ii) Tax: If there is a gain Short Term or Long Term, then you will have to pay the income tax as applicable. Therefore, when you switch from one scheme to another, it invariably is a process of selling out of one scheme and investing in another, so the impact will be accordingly. Only in case of two schemes getting merged together, it's not treated as selling out and then investing again. When you switch out of a regular plan to a direct plan, then also it is treated as selling out of regular plan and investing fresh in direct plan so all costs and tax provisions will apply. If you are invested in a scheme, which is not doing well and you also believe that it will not recover back, then you should not let exit load or tax impact prevent you from redeeming out.

Q: 34-year-old PR Sujoy writes to us from Delhi. I have invested in Franklin India Tax shield Growth of Rs 2,000, HDFC Tax Saver Growth of Rs 1,000, ICICI Prudential Long Term Equity Fund (Tax Saving) of Rs 1,000 and ICICI Prud Value Discovery Fund Growth of Rs 1,000. I've Started all these from February 2018. I have NPS of Rs 4,700 per month started in 2013 deducted and PPF of Rs 10,000 per month started in 2013. Also, I have invested in stocks like Maruti, Bandan Bank, L&T Ltd, HDFC AMC, Lemon Tree etc. Please let me know how to achieve target of Rs 10-15 crore. My purpose is for my child's education and he is 2-year-old.

A: Let’s evaluate your portfolio in two parts: Existing schemes and allocation and amount invested per month and targeted corpus requirement. You are investing Rs 5,000 per month in equity mutual funds, Rs 4,700 in NPS and Rs 10,000 per month in PPF. Existing Schemes: Too many ELSS schemes for a monthly investment of Rs 5,000. Stop HDFC Tax Saver and ICICI Long Term Equity Fund and invest the entire Rs 4,000 per month in Franklin India Tax Shield. Continue with ICICI Pru Value Discovery fund. Investment per month against targeted corpus: Your goals are at least 10-15 years away but your allocation is more towards debt (PPF Rs 10,000 and Equity Rs 5,000). It has to be the other way around where you will invest Rs 10,000 in equity and Rs 5,000 in PPF. Increase your Equity SIP by another Rs 5,000 and reduce your PPF. Invest the non ELSS Rs 6,000 as follows:

i) ICICI Value Discovery Fund – Rs 2,000

ii) HDFC Mid Cap Opportunities Fund – Rs 2,000

ii) SBI Magnum Multi Cap Fund – Rs 2,000

With just Rs 10,000 in equity SIP and Rs 5,000 in PPF, you will not be able to accumulate Rs 10-15 crore in 10-15 years. So keep increasing your investments every year by as much as possible. Finally, I suggest that you chalk out a reasonable targeted sum keeping in mind current costs and estimated future costs. As of now, Rs 10-15 crore looks unreasonable given the overall financial information as provided by you.

Q: 40-year-old Ajit Kumar writes to us from Allahabad. I have invested Rs 2,000 each in DSP Small Cap Fund, HDFC Midcap Opportunity, SBI Magnum Multicap, Aditya Birla Sun Life Frontline Equity Fund and Aditya Birla Sun Life Tax Relief 96 Fund since 2016. There is no issue of time horizon. In addition, I have to invest Rs 5,000 also. Please recommend a suitable equity fund or to distribute among currently invested funds.

A: I will suggest two changes for you. Stop DSP Small Cap Fund and add a pure Large Cap fund i.e. Axis Bluechip Fund. For the fresh Rs 5,000, split it into two schemes and invest in your existing schemes as follows: Rs 2,500 in SBI Magnum Multi Cap and Rs 2,500 in Birla Frontline Equity Fund.

Q: Rupesh Srivastava writes to us on Facebook. Can we keep investing in SIP with three years period?

A: Yes, you can do a SIP for three years period. After three years of investing via SIP, you can continue to be invested without any further inflow and just let that money grow in case you do not need it.

Q: Anit Chatterjee writes to us on Facebook. Which mutual fund has portfolio of consumption stocks. I want to invest in a mutual fund specifically consisting of consumer stocks.

A: SBI Consumption Opportunities Fund and ICICI FMCG Fund are good options in this category.

Q: Hardik Desai writes to us on Facebook. I have invested in ABSL Frontline Equity Fund, HDFC Small Cap Fund, Franklin India Tax Shield Fund and HDFC Hybrid Equity Fund for my child's study. Please advise all funds are good for long term.

A: From a long term perspective, I would suggest that you invest in a diversified scheme rather than a dedicated small cap fund. Accordingly, stop your investment in HDFC Small cap and instead invest in Mirae Asset India Equity Fund. Rest of the schemes are fine and you may continue.

Q: Vikram Lotwala writes to us on Facebook. I have invested in Franklin Prima Plus Direct Fund. Please advise regarding Franklin Prima Plus which is underperforming since past few years. I have horizon of five years. If you advise to exit, which is better in same category?

A: The scheme name has changed to Franklin India Equity Fund and it continues to be a multicap fund. This is a very old scheme (launched in 1994) and has a good track record. You may continue with the same and perhaps review the performance after another 6 months.

Q: Kaliswamy writes to us on Twitter. I want to invest lump sum in Tata Digital Fund Growth.

A: This is a sector fund, so if you are comfortable with a sector fund then this is a good scheme to invest into. I hope you understand that sector funds need to be monitored and tracked regularly when compared to other diversified schemes. So if you are sure to invest in an IT sector fund, only then go ahead. Do not only look at past 1-2 years returns and pick the scheme.

Disclaimer: The views and investment tips expressed by investment experts on CNBCT-V18 are their own and not that of the website or its management. CNBC-TV18 advises users to check with certified experts before taking any investment decisions.

First Published:Sept 25, 2018 5:08 PM IST