Liquid funds best to park savings for emergencies

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I have 50,000 to invest per month for 12-15 years, which can be almost doubled in a few years. I aim to create a corpus ( 4 crore) for my retirement, and have some fixed deposits as emergency funds. How should I divide the amount in equity mutual funds to maximize my corpus?

—Name withheld on request

As of now, you are investing 50,000 a month in, let us assume, an aggressive portfolio that could return 12% per year on average. If you increase your investments more or earlier, there is a good likelihood that you will reach your target and retire comfortably. Regarding your portfolio, please do use index funds for large-cap funds and for the part of your portfolio that is investing in international funds as well. For domestic small- and mid-cap funds, you can go with managed funds from Mint 50. And about your emergency funds, liquid funds would be your best bet—they will help you access your funds in one business day, and will be tax advantageous if you leave it invested for more than 3 years.

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Srikanth Meenakshi is founder of Prime Investor.

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