“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

Key Information

AUM ₹ 7,373 Cr.
NAV ₹ 31.5 (as on Feb 25, 2019)
Rating by Groww 5- star
Minimum SIP Investment ₹ 500
Expense Ratio 1.06%
Risk Grade Moderately High Risk
Fund manager Ajay Garg

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. (7.5%),
  • Reliance Industries Ltd. (7.2%),
  • Gillette India Ltd. (6.8%),
  • Bayer CropScience Ltd. (6.0%),
  • Pfizer Ltd. (5.4%),
  • GlaxoSmithKline Pharmaceuticals Ltd. (5.2%).

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 on Groww.

Key Information

AUM ₹ 3425 Cr.
NAV ₹ 37.2 (as on Feb 15, 2019)
Rating by Groww 5- star
Minimum SIP Investment ₹ 1000
Expense Ratio 0.80%
Risk Grade Moderately High Risk
Fund manager Pankaj Tibrewal

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. (3.6%)
  • Schaeffler India Ltd. (3.3%)
  • RBL Bank Ltd. (3.3%)
  • Bharat Financial Inclusion Ltd. (3.2%)
  • Atul Ltd. (3.1%).

Holding Analysis

This could be a natural choice for long-term investment at the early stage of your career.

3. L&T Midcap Fund

L&T Midcap fund is easily regarded as one of the best funds in the mid-cap category.

Key Information

AUM ₹3,665 Cr.
NAV ₹130.8
Rating by Groww 5- star
Minimum SIP Investment ₹ 500
Expense Ratio 0.93%
Risk Grade  High Risk
Fund manager Harsha Upadhyaya

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.

Best Equity Funds to Invest in 2019

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. (3.3%)
  • City Union Bank Ltd. (3.2%)
  • Berger Paint India Ltd. (2.7)
  • Torrent Pharmaceuticals Ltd. (2.2%)
  • 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.

Key Information

AUM ₹ 10,343 Cr.
NAV ₹ 49.5 (as on Feb 15, 2019)
Rating by Groww 5- star
Minimum SIP Investment ₹ 1000
Expense Ratio 0.79%
Risk Grade Moderately High Risk
Fund manager Neelesh Surana, Harshad Borawake

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 (8.7%)
  • Reliance Industries Limited (6.1%)
  • Axis Bank Limited (5.4%)
  • ICICI Bank Limited (5.1%)
  • TCS Limited (4%)

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.

Key Information

AUM ₹ 1779 Cr.
NAV ₹ 37 (as on Feb 25, 2019)
Rating by Groww 4- star
Minimum SIP Investment ₹ 1000
Expense Ratio 0.99%
Risk Grade Moderately High Risk
Fund manager Shreyash Devalkar

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. (3.4%),
  • Aditya Birla Fashion and Retail Ltd. (1.9%),
  • Avenue Supermarts Ltd. (1.2%),
  • Varroc Engineering Pvt Ltd. (0.4%)
  • TCNS Clothing Co Ltd. (0.4%).

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 take.

It will not only help in generating multi-fold returns but also protect the investor from market volatility and fluctuations.

To see more top funds to invest in 2019 from every mutual fund category, check out: 30 Best Funds to Invest in 2019: Groww 30.

Happy investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww. 

 

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