How much of my salary should go to SIP?

-Rajesh

You should try to save at least 30% of your gross income or 60,000 every month. To calculate the amount you should invest in SIP, we have to use the standard formula, which is your age minus 100 for investing in equities through mutual funds. You should invest according to this calculation 42,000 or 70% of your monthly savings 60000 in SIP.

To round it off you can start with SIP 40,000. You should divide this amount in five SIPs 8,000 each. The first two SIPs should be in two different large cap funds, the third one can be in a good mid cap fund, the fourth SIP 8,000 can be invested in a Flexi Cap Fund and the fifth can be in any theme of your choice like Small Cap Fund or Special Situation Fund or International Equity Fund or FMCG Fund etc.

I want to start investing in mutual fund SIP. Can you please recommend names of schemes which have a track record of at least 15 years and where the annualized performance has been more than 15% p.a.?

-Reena

The tenure of the scheme is always very helpful in decision making as schemes with longer track record are considered better than the schemes launched recently. However, past performance may or may not be repeated in future and you should not base your decisions solely on the length of the scheme and the past track record of the scheme.

However, to answer your question, here are five such schemes which were launched more than 15 years back and where the performance on CAGR (Compound Annual Growth Rate) basis has also been more than 15% per annum:

1. HDFC Flexi Cap Fund – Launched on Jan 1, 1995.

2. Canara Robeco Emerging Equity Fund—Launched on March 11, 2005.

3. Kotak Emerging Equity Fund-Launched on March 30, 2007.

4. Kotak Small Cap Fund – Launched on February 24, 2005.

5. ICICI Prudential Equity & Debt Fund – Launched on November 3, 1999.

The past performance of all the above schemes has been more than 15% per annum on CAGR basis. However, we again caution you not to base your decisions primarily on past performance only as it may or may not be repeated in future.

Rajiv Bajaj is the Chairman and Managing Director of Bajaj Capital Limited.