To take low risk for investment horizon of 5-7 years with expected returns of 10-12% I am planning to go with investing 70% in Conservative Hybrid Funds and 30% in Aggressive Hybrid Funds. Is this the good option or any other suggestions?
In my humble opinion for such a time horizon you can choose FDs or debt oriented mutual funds. Having allocation towards aggressive hybrid fund counts as equity from taxation point of view but the volatility of such a fund is only a notch lower than pure equity funds, that means in case of a crash or deep correction you can still end up losing a significant amount. Conservative hybrid funds are just bad category and they are taxed according to yo your slab meaning you could potentially end up paying a higher tax, and that fund also includes equity portion which can go up to as much as 25%. Better go for FDs or just debt mutual funds. Why chase returns for such short time frame?
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Thanks for your valuable suggestion
In my opinion, 5 - 7 yrs is not ‘such short time frame’
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5-7 years is not exactly long term either. It is medium term if you go by certain definitions. Still I would like to point out that if the goal is necessary and the requirement of the amount is non-negotiable then it is better to play it safe than chasing 1 or 2 percent extra returns. Just hope for the best but plan for the worst.
Ok. I agree.