I am 27 years old and had started investing in MF and other instruments for retirement from last year. I currently invest in the following:

1. Axis Bluechip- 4000

2. Canara Robeco Equity tax saver- 3000

3. HDFC Index Nifty 50- 5000

4. Parag Parikh Flexicap- 3000

5. Axis Small cap- 4000

6. Quant Absolute- 2750

7. Tata Digital India Fund- 2200

8. ICICI Prudential nasdaq 100 Index Fund- 3000

9. PPF- 1.5 lakh annually

10. NPS- 50 k annually

Please advice whether I should discard, change or add any funds to my portfolio. I want to plan for an early retirement at the age of 40 and aiming for a corpus of 5 crore. Please advice on the monthly sip amount to achieve the same and appropriate funds. Thank you!

Ans: Schemes are decent but there are too many.

XIRR of 26.5 per cent is very good. However, it is not sustainable in the long run.

Risk-free rate (10 year G-sec) + inflation and some alpha should be a reasonable expectation.

In 12 years, a monthly SIP of Rs 39,000 may create a corpus of Rs 1.5 crores @ 13 per cent interest rate.

 

Ans: There are too many funds; restrict yourself to 4 to 6 funds at the most.

 

Ans: These are sufficient funds, don’t add any further. In 18 years (3 previous and next 15 years) it is possible to achieve the target!

Ans: Hi Kirti. I would advice few changes in your portfolio; reconsider your schemes in Axis and Parag Parikh AMC. To achieve a corpus of 5 Cr till your early retirement age, you may increase the sip to 1.13 lakh. Try adding your sip annually if 1.13 lakh aren’t possible.

Ans: It's commendable that you've been consistently investing in mutual funds through SIPs for several years, laying a strong foundation for your retirement. Let's evaluate your current investment strategy and make adjustments to align with your retirement goal.

Your portfolio reflects a diversified mix of small-cap, mid-cap, and flexi-cap funds, which offer growth potential over the long term. However, given your goal of building a substantial corpus for retirement, we may need to reassess your asset allocation and make some adjustments.

Firstly, let's review your SIP amounts and consider increasing them gradually to accelerate wealth accumulation. Since your SIPs increase by 5% to 10% annually, this incremental growth can boost your investment corpus significantly over time.

Consider reallocating some of your SIP amounts to funds with a proven track record of consistent performance and lower volatility. While small-cap and mid-cap funds can offer higher returns, they also come with increased risk. Diversifying across large-cap funds or balanced funds can provide stability to your portfolio.

Moreover, review your overall asset allocation to ensure it remains aligned with your risk tolerance and investment objectives. While equity investments offer growth potential, it's essential to balance them with fixed-income securities like debt funds or PPF to mitigate risk.

Given your age and retirement horizon, periodically reassess your investment strategy and make necessary adjustments to stay on track towards your goal. Consider consulting with a Certified Financial Planner to develop a personalized retirement plan tailored to your needs and aspirations.

In conclusion, by fine-tuning your investment strategy, increasing your SIP amounts, and maintaining a disciplined approach, you can work towards achieving your retirement goal of building a corpus of Rs 6 - 7 crores by the age of 58.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in