Jewellery Buy Isn’t Equal To Investing In Gold Asset Class

It is good you want to start planning for your future. But it should not be limited only to create a fund for buying a house; you should also start creating a corpus for your other financial needs, such as buying a car, planning for a holiday and the most important of all your retirement. To achieve the same, you need to start now as it gives you a heads up.

As you have currently projected a need which is 10 years away, your investments can be long term. You should start investing via systematic investment plans (SIPs) in equity funds. It seems you are a first time investor and if you are not comfortable taking risk or are risk averse, you can look at hybrid funds or monthly income plans (MIPs). Hybrid or balanced funds invest 65% in equities and the balance in debt instruments. Funds with a consistent track record are HDFC Balanced fund and Tata Balanced fund. MIPs invest even less in equities (15-25%). Reliance MIP and Canara Robeco MIP are good options.

You are right when you say that equity MFs have not seen any gains in the last two years. On an average, equity funds have delivered low or negative returns during the said period. But that is the true nature of equity; any equity investment needs to be done with a long-term view. What you need to do is periodically review it and ensure the fund you are invested in is not under-performing and is in accordance with its peer group. In case of continuous underperformance, consider changing the fund.

You should continue your PPF. Buying jewellery is not an investment and a better way to invest in gold is through exchange-traded funds and gold funds. But you should not have more than 10% of your investments in gold; the balance can be spread between MFs and PPF. 

You should try to optimize your portfolio rather than maximizing your returns. The endeavour should be to achieve a healthy risk-adjusted return.