Express Money: Ask Us
Five to seven years is a good time span and you can create a good corpus in this time period. First things first, it is good to keep a certain part of your income for emergency. At your age, requirement for medical and other reasons will be very high and it is good to have a fund to fulfill this requirement. To receive Rs 10 lakh in 7 years, you need to invest Rs 8,000 per month in a combination of equity and debt mutual funds. You should invest some part of your fund (Rs 8,000 in this case) in equity mutual funds and some part in balanced fund. Equity mutual funds invest their major part in equities and hence they provide better return in the longer term. Typically, equity mutual funds provide a return of 12-18 per cent CAGR over longer time. The other fund is a balanced fund which invests a part in equity and a part in debt. This means, there will be lower risk than the equity mutual funds but the prospect of returns is also low. Balanced funds, in general, provide a return of 8-15 per cent. By dividing your money in both funds, you can get a return
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