consider at least a three-year time frame for getting better post-tax returns from your debt fund investments. Photo: iStock

consider at least a three-year time frame for getting better post-tax returns from your debt fund investments. Photo: iStock


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I am 29 years old and want to invest a lump sum of ₹2- 2.5 lakh for 2-3 years. I am looking for returns that are better than what FDs give. I am considering investing in liquid funds through a systematic transfer plan (STP). Do I need to increase the time period to get better returns? Please suggest some good schemes.

—Sushant Suresh

If you invest for a period of at least three years in debt funds, you will get the benefit of capital gains indexation that will lower taxes on the profits from your portfolio. When this happens, the odds of beating FD returns (which do not get indexation benefits) improve dramatically. So, to answer your last question first, do consider at least a three-year time frame for getting better post-tax returns from your investments.

Regarding investment choice, you can invest in short-term debt funds such as ICICI Prudential short-term fund and UTI Short-Term Income Fund. Since these are debt funds, there is no need to do STP into these funds—you can invest your lump sum in a single investment.

I am 35 years old and want to start investing in SIPs. How much do I need to invest per month if I need a retirement corpus of ₹1.5 crore in 15 years from now?


Assuming an annual return of 12% per year, you would need to invest ₹32,000 approximately every month for the next 15 years for a corpus of ₹1.5 crore. If your expectations are a more moderate 10% per year, the SIP amount needed per month would be ₹37,000. On the higher side, if you expect a roaring economy and markets ahead and expect a 15% return, you could get away with investing ₹24,000 a year to achieve the same corpus in this period.

A good strategy would be to ignore these assumptions, and invest as much as you can every month (and increase the investment every year) so that you can retire with the satisfaction that you did your best.

I invest ₹5,000 per month in HDFC Top 200 Growth and ₹2,500 per month in Tata PE Equity. I want to invest another ₹3,000 per month. Which fund is good for the long run? Also, suggest a fund where I can invest ₹1 lakh as fixed deposit for 10 years.


Much of your investments today is going to a large-cap fund in the form of the HDFC Top 100 (previously called HDFC Top 200 fund). The remaining third is going to a fund that is a diversified fund by portfolio and a value fund by investment style (it’s new categorisation is as a value-oriented equity fund). As a long-term investor, you can consider adding a mid-cap fund such as Invesco India to your portfolio.

Regarding your ₹1 lakh investment, in mutual funds, the equivalent of an FD is a fixed maturity plan (FMP) which are fixed-term closed-end funds that offer returns that are usually a one-half-to-one percentage point better than bank FDs. However, these FMPs are usually only available for three years. So, you can either consider investing in such a fund now, and reinvest every three years in a similar fund. Or, you can consider investing in an open-ended short-term fund such as HDFC Regular Savings fund. It will give you the flexibility of investing in it and redeeming out of it at your convenience without any lock-in.


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