Should I stop my VPF and invest in mutual funds?

I am 30 years old and have a two-year-old kid. I started investing a month ago in the following mutual funds without any goal.

Franklin India Prima Fund (Regular, Growth): Rs 3,000

Mirae Asset Emerging Bluechip Fund (Regular, Growth): Rs 2,500

I am ready to take high risk.

I want to get Rs 40 lakh, Rs 50 lakh, Rs 70 lakh and Rs 1.5 crore in next 15, 20, 25 and 30 years respectively.

My EPF deduction is Rs 2,500 per month and VPF deduction is Rs 5,000. Is VPF a good option? Can I stop VPF and invest in mutual funds?

Please suggest modifications and new suggestions in my investment to achieve my goals.

–Nagarjuna Reddy

Kartik Swaminathan, a Certified Financial Planner, responds:

The current choice of funds that you have made seems fine. I will not recommend stopping VPF as you have not completely used the tax benefits. I would recommend choosing safety and tax benefits over liquidity and continue Rs 2,500 + Rs 3,000 monthly in VPF and EPF.

To reach your specified goals, you should invest an additional Rs 9,000 to Rs 10,000 per month in some aggressive funds. You may invest in small and midcaps if you can take the risk. One suggestion would be Birla Sun Life Small and Midcap Fund. I would also suggest you to take the help of a financial planner who can help you with a detailed plan after understanding your risk profile, responsibilities and goals.

I have assumed annual returns of around 12 per cent to 14 per cent on mutual funds and around 7 per cent returns on PF while making these suggestions.

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