Investors with 3-4 yr goals should infuse debt in portfolio

If you are investing for three to four years, pick up a fund which has about 20-30% into equity and rest into a debt based instrument.

Gaurav Mashruwala

CFP

"Pick up a fund which should have about 20-30% into equity and rest into a debt based instrument," he said in an interview to CNBC-TV18.

He says that investors who have a timeframe of more than five years can look to be more aggressive and invest solely in equity funds, but other debt should be included.

Below is an edited transcript of his interview.

Q: An investor wants to invest Rs 10,000 per month for a time frame of three- four years. How should he allocate the money?

A: If you are saying that after about three to four years you would want a kind of corpus which you can use as seed capital to start your own enterprise here is my recommendation. Pick up a mutual fund scheme which would have a combination of debt and equity, that's because you are saying three to four years. If it goes beyond five I would probably encourage you to take a slightly aggressive call on an equity fund, but since you are saying three to four years pick up a fund which should have about 20-30% into equity and rest into a debt based instrument.

There are several mutual fund companies which has fund of funds which can help or you can take two separate funds. A debt fund is one which predominantly invests into government securities and bonds, and an equity fund which puts into stock market. So either take two separate funds or make a combination of that. As and when you require money just start redeeming from that. But you can keep investing, you can give 12 post dated checks or you can give an ECS mandate to a mutual fund company and they will keep debiting your account and keep investing for you based on NAV and at the end of three years you would have a corpus.