How much of my salary should go into SIP?

—Rajesh

You must try to save at least 30% of your gross income or $60,000 per month. To calculate how much you should invest in SIP, we’ll have to use the standard formula, subtracting your age from 100 to be invested in equity through mutual funds. According to this calculation, you should invest $42,000 or 70% of your monthly savings $60000 in SIP.

To round it off, you can start with a SIP of $40,000. You should divide the amount into five SIP $8,000 each. The first two SIPs should be in two different large-cap funds, the third could be in some good mid-cap funds, the fourth SIP of $8,000 can be invested in flexible fund and fifth fund can be under any theme of your choice like small cap fund or special situation fund or international hedge fund or FMCG fund etc.

I want to start investing in SIP mutual funds. Can you please recommend the names of the programs that have a record of at least 15 years and have an annual performance higher than 15% per year?

—Reena

Program tenure is always very helpful in decision making because programs with a long track record are considered better than beginner programs. However, past performance may or may not be repeatable in the future, and you should not base your decision purely on the length of the program and its past track record.

However, to answer your question, here are five such programs that were launched more than 15 years ago and the performance is also 15% higher per year on a CAGR (compounded annual growth rate) basis. :

1. HDFC Flexi Cap Foundation —launched January 1, 1995.

2. Canara Robeco Emerging Equities Fund—launched on March 11, 2005.

3. Kotak Emerging Equity Fund—launched on March 30, 2007.

4. Kotak Small Cap Fund—launched on February 24, 2005.

5. ICICI Prudential Equity and Debt Fund—launched on November 3, 1999.

The past performance of all the programs above is 15% higher per year on a CAGR basis. Again, however, we recommend that you do not base your decision solely on past performance as it may or may not be repeated in the future.

Rajiv Bajaj is the chairman and chief executive officer, Bajaj Capital Ltd.