I am a 30 year old individual currently earning approx 1.1 Lakhs (in hand) monthly. I am currently investing in 2 tax savings funds (under 80C) - Parag Parikh Tax Saver Fund and Quant Tax Plan (Each 3500 INR per month). Total is 7000 per month in tax savings ELSS. (Remaining in 80C is covered from EPF and term insurance premium). Please tell me if I should continue these 2 funds or you have a better suggestion. In case of suggestions, please share the fund to be replaced with which fund. Also, I am investing in 4 non-tax savings funds - SBI small cap, Nippon India small cap, ICICI prudential bluechip fund, Axis Mid cap Fund (each 2500 INR that is total of 10000 INR per month). I want to continue investing for a long time. I can increase the amount from 10000 to 15000 monthly. Please suggest if I should continue these SIPs or you want to change and give some suggestions. In case of suggestions, please share the fund to be replaced with which fund.

Ans: Continue but with lesser funds; four to six funds are adequate for diversification purpose, after that it drags down the returns of the portfolio.

Ans: Continue but with lesser funds; four to six funds are adequate for diversification purpose, after that it drags down the returns of the portfolio.

 

Ans: Hello B Saravanan. Your portfolio seems in line with the market. I would recommend you reconsider Parag Parikh AMC and switch to better alternative schemes in same category. Also, you may introduce mid cap, large & mid cap categories for your future new sips.

Ans: Firstly, I commend you for taking proactive steps towards building your financial future at such a young age. Your commitment to increasing your investments over time is commendable and will serve you well in achieving your financial goals.

Regarding your query about ELSS tax saver funds, they can indeed be a valuable addition to your investment portfolio. ELSS funds not only offer tax benefits under Section 80C of the Income Tax Act but also have the potential to generate higher returns over the long term compared to traditional investment avenues like PPF.

As for comparing ELSS funds with small-cap funds, it's essential to understand that they belong to different categories with varying risk profiles. Small-cap funds typically carry higher risk but also have the potential for higher returns, while ELSS funds invest primarily in equity markets and have the added advantage of tax benefits. Both can play a role in diversifying your investment portfolio and achieving your financial goals.

Considering your goal of attaining financial freedom in the next ten years with a corpus of over 1 crore, it's essential to review your investment strategy periodically and make adjustments as needed. Increasing your monthly SIP to 30k and potentially reallocating some funds from other schemes could be a prudent move, given your high income and relatively low living expenses.

Regarding your existing LIC Jeevan Anand policy, surrendering it and reinvesting the proceeds in mutual funds could potentially yield higher returns, especially considering your long investment horizon and risk tolerance. However, it's essential to evaluate the surrender value, any applicable penalties, and the potential tax implications before making a decision.

In summary, continue with your disciplined approach to investing, consider adding ELSS funds to your portfolio, and review your investments periodically to ensure they align with your financial goals and risk tolerance.

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