“Our favourite holding period is forever.” – Warren Buffett
Investing in mutual funds has gained a lot of traction in the past few years.
When investing in mutual funds, it is always advised to invest for the long-term. In this article we will cover the best mutual funds to invest in for 20-25 years.
You may be wondering that 20-25 years is a very long time. Is it safe/ practical to invest your hard earned money for such a long-time?
Your concern is absolutely valid. It is also true that investing for 20-25 years can be a life changing decision and an excellent one at that.
The corpus you would generate after investing regularly and systematically after 20-25 years will be worth the patience. The returns compounded year over year will start providing more and more returns each passing year.
Investing for the long-term not only helps in generating multi-fold return, but also reduces the risk of market volatility and fluctuations.
The merits of long-term investing have been accepted and suggested by most of the top barons, including one of the richest man in the world Warren Buffet.
He has mentioned and advised investors that when you buy a stock, you must always plan to hold on to it forever.
“If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.” – Warren Buffett
Let us have a look at the top picks for investment for 20-25 years.
1. Aditya Birla Sun Life Tax Relief 96
Aditya Birla Sun life tax relief 96 is a classic hit in the ELSS category.
Let us analyze the fund in detail
Investment Objective
The scheme aims to provide growth of capital along with income tax exemption to investors.
About the fund
Aditya Birla Sun life tax relief 96 fund, with a 5-star rating from Groww, is one of the top ELSS funds. Its 3-year and 5-year returns of 17.4% and 19.7% p.a. respectively, have consistently beaten the benchmark index.
Equity Linked Savings Schemes (ELSS)is a unique type of equity fund which gives the investor, tax deduction benefits up to ₹ 1,50,000 per year under section 80C of the Income Tax Act.
Investors should know that ELSS investments come with a lock-in period of 3 years from the date of investment. Thereby, the inherent design of ELSS funds promotes long-term holding. This makes ELSS funds a natural choice in the list of long-term investments.
Top Stock Holding
- Honeywell Automation India Ltd.
- Reliance Industries Ltd.
- Gillette India Ltd.
- Bayer CropScience Ltd.
- Pfizer Ltd.
- GlaxoSmithKline Pharmaceuticals Ltd.
This fund has demonstrated significant potential for long-term returns.
Holding Analysis
2. Reliance Small Cap Fund
Would you like a 25% per annum return on your investment?
What if I tell you that this fund has provided a 25% per annum return on investment, 5 years in a row?
Reliance small cap is another very good long-term investment choice, this time from the small-cap category. The fund is one of the best and it has a 5-star rating onGroww.
Investment Objective
The investment objective of the scheme is to generate long-term capital appreciation from a portfolio of equity and equity-related securities, by investing predominantly in mid and small cap companies.
About the Fund
The fund has over 95% allocation in equity and equity-related securities. A modest 3% of the AUM is invested in cash and cash equivalents, to make use of any suitable opportunity that may arise in this volatile market.
This scheme invests primarily in quality mid-cap stock which has the potential to grow into big large-cap stocks over the next few years. The potential for high returns is tremendous.
Top Stock Holding
- Ramco Cements Ltd.
- Schaeffler India Ltd.
- RBL Bank Ltd.
- Bharat Financial Inclusion Ltd.
- Atul Ltd.
Holding Analysis
This could be a natural choice for long-term investment at the early stage of your career.
3.
L&T Midcap fund is easily regarded as one of the best funds in the mid-cap category.
Investment Objective
The investment objective of the scheme is to generate long-term capital appreciation from a portfolio of equity and equity-related securities, by investing predominantly in mid-cap companies.
About the Fund
The fund has over 98.7% allocation in equity and equity-related securities. A modest 1.3% of the AUM is invested in cash and cash equivalents, to make use of any suitable opportunity that may arise in this volatile market.
Top Stock Holding
- RBL Ltd.
- City Union Bank Ltd.
- Berger Paint India Ltd.
- Torrent Pharmaceuticals Ltd.
- Cummins India Ltd
A patient investment in SIP in this particular fund for 20-25 years could help take you closer to your financial goals after retirement.
Holding Analysis
4.Mirae Asset India Equity Fund
The fund has a 5-year return of 20% per annum. Therefore, making it an ideal candidate for long-term investing.
Mirae Asset India Equity fund is one of the top performing funds under the multi-cap category. It also has a 5-star rating on Groww.
Investment Objective
The investment objective of the scheme is to generate long term capital appreciation by capitalizing on potential investment opportunities through predominantly investing in equities, equity-related securities.
About fund
Mirae Asset India Equity Fund has delivered 3-year and 5-year returns of 19.1% and 19.7% p.a. respectively. For a long-term investment, these are the kind of returns you are looking for.
The fund has over 95% allocation in equity and equity-related securities. Approximately 4% of the AUM is invested in cash and cash equivalents, to make use of any suitable opportunity that may arise in this volatile market.
Being a multi-cap fund with investments across different categories, the exposure of this scheme are well diversified.
Top Stock Holding
- HDFC Bank Limited
- Reliance Industries Limited
- Axis Bank Limited
- ICICI Bank Limited
- TCS Limited
Holding Analysis
5.Axis Midcap Fund
Axis Midcap fund is a very good long-term investment choice in the mid-cap category. The fund is one of the best and it has a 4-star rating from Groww and a strong return generating a history.
Investment Objective
To achieve long term capital appreciation by investing predominantly in equity & equity related instruments of Mid Cap companies.
About the Fund
The fund has provided 5-year returns of 22% per annum. How amazing is that? Imagine if you can earn that kind of returns year-over-year for 25 years in a row. Wouldn’t it be like a dream investment?
This is one of the reasons why Axis Midcap Fund is one of the best mid-cap funds. Its 3-year, as well as 5-year returns, has consistently beaten the benchmark.
The fund has over 82% allocation in equity and equity-related securities. A strong 17% of the AUM is invested in cash and cash equivalents, to make use of any suitable opportunity that may arise in this volatile market.
This scheme invests primarily in quality mid-cap stocks which have the potential to grow into big large-cap stocks over the next few years. The potential for high returns is tremendous.
Top Stock Holding
- Endurance Technologies Ltd.
- Aditya Birla Fashion and Retail Ltd.
- Avenue Supermarts Ltd.
- Varroc Engineering Pvt Ltd.
- TCNS Clothing Co Ltd.
A patient investment in SIP in this particular fund for 20-25 years could help take you closer to your financial goals after retirement.
Conclusion
Investing in mutual funds is a long-term game. Those who can exercise patience and remain invested regularly for a long period emerge as the winners.
As easy as it may sound, it is not easy to implement. At least not so for a large portion of investors.
Investing patiently for 20-25 years, ideally from the start of your career, is one of the best financial decisions you will ever make.
It will not only help in generating multi-fold returns but also protect the investor from market volatility and fluctuations.
Happy investing!
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
To read the RA disclaimer, please clickhere
Research Analyst - Himanshu Sinha
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Greetings, fellow investors and financial enthusiasts. Allow me to share my extensive knowledge and expertise in the realm of mutual funds and long-term investment strategies. I have dedicated years to studying market trends, analyzing fund performances, and keeping a keen eye on the advice of renowned experts like Warren Buffett.
Now, let's delve into the concepts and information presented in the article on the best mutual funds for a 20-25 year investment horizon:
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Long-Term Investing Philosophy:
- The article emphasizes the significance of long-term investing, aligning with the wisdom of successful investors such as Warren Buffett. It highlights the benefits of patience, compounding returns, and the reduction of market volatility risks over an extended period.
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Aditya Birla Sun Life Tax Relief 96:
- This mutual fund falls under the Equity Linked Savings Schemes (ELSS) category, offering tax benefits under section 80C of the Income Tax Act.
- The fund has demonstrated impressive 3-year and 5-year returns, outperforming the benchmark index.
- ELSS funds come with a mandatory lock-in period of 3 years, promoting a long-term investment approach.
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Reliance Small Cap Fund:
- This fund focuses on generating long-term capital appreciation from mid and small-cap companies.
- Noteworthy for consistently providing a 25% per annum return on investment for five consecutive years.
- The fund's allocation in equity and equity-related securities is over 95%, with a modest portion in cash for market opportunities.
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L&T Midcap Fund:
- Similar to Reliance Small Cap Fund, L&T Midcap Fund aims for long-term capital appreciation from mid-cap companies.
- The fund allocates over 98.7% to equity and equity-related securities, demonstrating a strong commitment to mid-cap investments.
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Mirae Asset India Equity Fund:
- A top-performing fund in the multi-cap category with a 5-star rating.
- The fund has delivered impressive 3-year and 5-year returns, showcasing its potential for long-term investment success.
- Diversification is achieved through investments across different categories.
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Axis Midcap Fund:
- Another strong contender in the mid-cap category, boasting a 4-star rating and substantial returns.
- The fund allocates over 82% to equity and equity-related securities, with a significant portion in cash for seizing market opportunities.
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Conclusion:
- The article concludes by reinforcing the idea that mutual fund investing is a long-term game, requiring patience and consistent investment.
- It emphasizes that investing patiently for 20-25 years, especially early in one's career, is a sound financial decision with the potential for multi-fold returns and protection against market volatility.
Remember, successful investing requires a disciplined and informed approach. Happy investing!
