Hi Basu Sir,
My dad has suggested me to invest in below mentioned 5 High Risk Funds:
UTI Transportation and logic
ICICI Pru-Tech Fund
Franklin Build India
ICICI Pru Banking and Financial Fund
I wanted to know your views on each of these. As per him, even though these are high-risk funds, but still expected to grow well because of the developments that India might go through in next few years. Please share your thoughts.
Ankur-Before that, first understand your timeframe of this investment and how much return you are expecting.
Instead of investing in each sector specifically, I am more fond of investing in diversified funds. Why to take risk of any specific sector and lose my sleep? But in my view, I am confident of Banking, Pharma and Tech. Rest of all are not within my reach of monitoring.
I was thinking of starting monthly SIP of 2k for each of these for 3 years. Would that be ok?
Ankur-No equity investment if your time frame is less than three years.
I have read this earlier on some of the others queries as well. Can you please help me understand whats the reason for not going for 3 years period? How does it make a difference if i go for 3 years or 5 years? Also, what if i extend by 2 more years if it goes well for first 3 years?
Ankur-Good question. When you say equity, there is something called volatility attached to it. When you invest for long term then this volatility get reduced over a period of time. You check the history of equity investment. You notice that, those who invested for long term were only benefitted. I am not saying that after 3 years you lose money. But the risk of losing or gaining money is more when we say short term. Ideal equity investment should be more than 5+ years. First understand your exact goal period and how much is your expectancy. Stick to at first then look around for product which suites to your timeframe.
I would like to share the reason why i thought of investing for 3 years and may be i am wrong. When i checked this page:
I understood that 3 yrs returns % is higher than 5 year return %. Am i missing something?
Ankur-Forget about 3 years return, what if the 1-month return or 6-month return higher than 1 year, 3 years or 5 years return? Do you only invest for 1 month? The volatility will be high when you look for short term and this will reflect in high positive or negative returns. It will get subdued over longer period.