How to start saving for a down payment?

I am 28 and moving to a new job that will pay me Rs35,000 each month. I plan to buy a house after 3-5 years and can save Rs15,000-Rs20,000 each month. I have invested in a gold fund and also contribute Rs50,000 towards PPF and invest Rs2,000 a month in HDFC Top 200. Where can I invest for a sizeable down payment for the house? - Deep Dasgupta

Congratulations on the new job. Given your age, you should ideally be investing more in equities than what you are doing currently. Your investment in HDFC Top 200 is a good SIP to begin with, but you need to put more money into diversified equity funds, given the 3-5 year time frame that you are looking at to build a corpus for down payment for your house.

Plan to do monthly investments for a four-year period and use the last one year spread to switch the equity portfolio towards debt. Ensure that you check the performance of your investments at least once a year to gauge your progress towards your goal.

Although you can take a higher risk and invest in funds that have a higher exposure to mid- and small-cap stocks, we recommend you start by investing in funds like Canara Robeco Balance and HDFC Balanced Fund, besides a few tax saving funds like Franklin India Taxshield or Religare Invesco Tax Plan. All these funds have a long history and performance track record to invest in.

OLMdesk@outlookindia.com