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It is good to know that you are thinking of investing. You are quite young and hence can build a good wealth over time if you start now

I am investing in SIP systematic investment plan of Rs 1,500 in ICICI Pru focussed bluchip fund and Rs 1,500 in ICICI Discovery Fund. I can invest Rs 12,000 more per month. I am 34 years old and want to invest for 10 years. Which other funds shall I choose? Should I invest more in the present funds? I started SIP 4 months back. What if I want to invest lumpsum of Rs 50,000?

Aman Arora

It is good to know that you are thinking of investing. You are quite young and hence can build a good wealth over time if you start now. Coming to your question. Since you are just 34 years old,I would suggest you go for a combination of equity and balance funds. Equity mutual funds invest their major part in equities and hence they provide better return in the longer term. However,the value of equity mutual funds fluctuates widely in short term. As your time horizon is long,you will be able to build good corpus. Typically,equity mutual funds provide a return of 12 per cent to 18 per cent CAGR over longer time.

The other fund is balanced fund which invest 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 per cent to 15 per cent. Few funds you can think of investing is Birla sun life frontline equity,HDFC top 200,HDFC Balanced fund etc. You should see the performance of funds over last few years to decide on investment. There are other factors too but these dont matter in the long run. Hence go for SIP for longer term 8-20 years.

You can buy new funds and increase your SIP in blue chip fund from ICICI. Lumpsum amount can be invested in balanced fund or debt fund as of now. Investing lumpsum amount in equity fund at this juncture will be little risky.

We are paying interest against our son8217;s educational loan for his studies in the US. Please let me know under which clause of the IT Act we can claim refund.

Balkrishnan

Education loan payment has two parts. The interest part is exempted from taxable income. There is no limit on the interest part. This means you can claim all the interest payment for tax exemption. This is done under Section 80E of the Income Tax Act. The other important factor you have to see is who the borrower of the education loan is. Only he or she can claim the tax benefit.

Expert advice by Adhil Shetty,CEO,Bankbazaar

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