Crorepati goals: Is investing in this mutual fund scheme suitable for a moderate investor seeking Rs 1 crore in 15 years?

I am a moderate risk bearer I wish to do a SIP of Rs 10,000 each month presently I have done an SIP amount of Rs 83,000 in Motilal Oswal mid-cap direct growth fund and I wish to earn at least 1 crore in the next 15 years- is my chosen fund good? Is continuing in a single fund sufficient if not please suggest a diversified portfolio option.

Reply by Sanjiv Bajaj, Jt. Chairman and MD, BajajCapital Ltd.

Evaluating your investment strategy

Your Choice of Fund: Motilal Oswal Mid Cap Fund is a well-regarded fund with a strong track record. However, investing in a single fund, even a good one, can introduce significant risk. Diversification is key to managing risk and maximising returns.

Your goal of Rs 1 crore in 15 years:

To achieve this goal, you'll need to consider factors like:

Expected Returns: While historical performance is not indicative of future results, it can provide a benchmark. Aiming for a conservative 10% annualised return, you'll need to accumulate around Rs 25 lakhs over 15 years.

Market Volatility: Mid-cap funds tend to be more volatile than large-cap funds. While they offer higher potential returns, they also carry higher risk.

A diversified portfolio approach: To balance risk and reward, consider a diversified portfolio that includes:

Large-cap funds: These funds invest in large, established companies, offering stability and relatively lower volatility.

Mid-cap funds: As you've already chosen, these funds can provide growth potential. Small-Cap Funds: These funds invest in small companies with high growth potential, but they also come with higher risk.

Debt funds: To balance equity exposure, consider allocating a portion of your portfolio to debt funds, especially if you have a shorter investment horizon or a risk aversion.

Rebalancing Your Portfolio:

Regularly rebalancing your portfolio is crucial to maintain your desired asset allocation. As the value of different asset classes fluctuates, your portfolio may become imbalanced.

Rebalancing helps you stay on track with your long-term goals.

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