How should I invest to build a corpus of ₹23 lakh in 3 years?

—Vivek G Rabindranath

To calculate the amount you need to invest regularly to accumulate your desired amount, let us assume an annualized rate of return. If we assume the rate of 9%, then at the end of three years, you will have a corpus of 18.5 lakhs. If we assume 10%, it will be approximately equal to 19 lakhs, while the conservative assumption of 8% would result in 18 lakhs. So, this is the range of return expectations that you can have.

Coming to funds, considering the short term duration of your investments, you need to minimize your portfolio risk so that you are not exposed to market volatility when you need to return your money. You can invest 25% of your monthly corpus in a Nifty Index fund like UTI Nifty Index Fund. You can go for a balanced fund like ICICI Prudential Balanced Advantage Fund for the other 50% and debt funds like HDFC Corporate Bond Fund for the remaining 25%.

I want to know if this is a good time to invest in mutual funds through SIP. Which fund should I invest in? I’m 26 years old.

—Name withheld on request

Systematic Investment Plans (SIPs) are long-term investments in the equity market. Since they are not formed in bulk at any one time, the risk as well as their potential returns of these portfolios are spread over multiple tranches. Hence, there is no bad time to start investing through SIP. You can start it at any time and let the market volatility work its magic as you average your investment costs. As a young person, hopefully, with a long-term investment horizon, your portfolio may take on considerable risk and hence may be overweight on equity funds. The key is to choose good equity funds, and a curated list of good funds such as Mint20 Funds List can help you with your choices.

Srikant Meenakshi is the co-founder of PrimeInvestor.