Do you think this is a good time to invest in long-short funds?

—Mayank Kapoor

Long-short funds follow an investment strategy where they take long positions in undervalued stocks that are expected to perform well in the long run and short sell overvalued stocks where the stock price may fall. Such strategies can work well in current volatile times as well as in normal times. Mutual funds in India cannot offer long-short funds as they are not allowed to short-sell stocks in the fund portfolio. Alternative Investment Funds (AIFs) provide such investment avenues. If the objective is to reduce risk, you can consider Balanced Advantage or Dynamic Asset Allocation or Aggressive Hybrid Funds. These funds carry less risk than equity diversified funds. However, it is quite likely that a long-short strategy can outperform these hybrid strategies.

I am 38 years old and earn 1.5 lakh per month, out of which 57,000 goes towards a housing loan that will expire in November 2023. I need money for my two kids 10, 14, 18 and 25 years. Also I want to collect 2.8 crore in 20 years.

—Name withheld on request

the goal of 2.8 crore can be reached with a monthly investment of 39,000 if the total portfolio return is 10% per annum over 20 years. At 12% p.a. return, monthly investment of 31,000 would be needed.

We suggest you start investing for your children’s education as there will be some extra savings for your monthly expenses, EMIs and investments. 2.8 Cr target Since all your goals are long term, you can invest in equity diversified funds. You can increase this investment when your EMI stops in November 2023—invest that amount through Systematic Investment Plans (SIPs). You can invest in UTI/HDFC Nifty Index Fund, Mirae Large Cap/ICICI Pru Bluechip, Canara Robeco Emerging Equities, Parag Parikh Flexicap, IIFL Focused Equity and Kotak Emerging Equity (16-17%) each.

Harshad Chetanwala is the co-founder of MyWealthGrowth.com.