I am 31 years old. I earn roughly 1lkh per month. My PPF portfolio is around 16lkh(started in 2018) giving 12.5k per month( helps in 80CC) lock in till 2033, I also have SIP of 24k (Axis Index, Axis Midcap& SBI Small cap each 8k) I Invest in mostly blue chip stocks time to time which is round about 8lkh. My monthly spend is around 30k. I can invest max 27k if PPF continues & 39k if PPF doesn't continue after the lock in is over. I have a few questions: 1. Is it wise to continue PPF after 15 years is complete? Or choose another alternative when its complete. 2. Any suggestions to reach 3-4cr goal by the age of 45. Thanks in advance.

Ans: Building Wealth and Planning for the Future: A Comprehensive Approach
As a Certified Financial Planner, I understand your aspirations to build a substantial corpus for the future while optimizing your current investments. Let's address your questions and strategize for achieving your financial goals.

Continuing PPF after 15 Years: A Wise Move?
Assessing the Pros and Cons

Pros of Continuing PPF: PPF offers tax benefits under Section 80C, a competitive interest rate, and a tax-free maturity amount. Additionally, it provides a stable and secure investment avenue.

Cons of Continuing PPF: While PPF has its advantages, it's essential to consider whether it aligns with your overall financial goals and risk appetite. PPF's lock-in period of 15 years might limit liquidity, and its returns may not outpace inflation significantly.

Evaluating Alternatives

Explore Equity Investments: Given your age and risk tolerance, consider allocating a portion of your investable surplus to equity-oriented investments like mutual funds or direct equity. These avenues have the potential to generate higher returns over the long term, albeit with higher volatility.

Diversification Across Asset Classes: Diversifying your investment portfolio across various asset classes, including equity, debt, and possibly alternative investments like gold or real estate investment trusts (REITs), can mitigate risk and enhance overall returns.

Strategies to Achieve 3-4 Crore Goal by Age 45
Setting Realistic Targets

Evaluate Current Savings Rate: Assess your current savings rate and determine if there's room to increase it further to accelerate wealth accumulation. Since you can invest a maximum of Rs. 39,000 monthly post-PPF lock-in, utilize this capacity effectively.

Optimizing Investment Allocation: Review your existing investment portfolio to ensure alignment with your financial goals and risk tolerance. Consider rebalancing periodically to maintain an optimal asset allocation mix.

Maximizing Returns

Focus on Equity Investments: Given your relatively young age and long investment horizon, prioritize equity-oriented investments that have historically delivered superior returns over the long term. However, ensure proper diversification and risk management.

Systematic Investment Plans (SIPs): Continue your SIPs in diversified equity mutual funds, preferably across large-cap, mid-cap, and small-cap segments, to benefit from rupee cost averaging and compounding over time.

Monitoring and Reviewing

Regular Portfolio Review: Schedule periodic portfolio reviews to track the performance of your investments and make necessary adjustments based on changes in market conditions, financial goals, and risk appetite.

Risk Management: Stay abreast of economic and market developments to proactively manage risks associated with your investment portfolio. Consider consulting with a Certified Financial Planner periodically to ensure your financial plan remains on track.

Conclusion
By strategically balancing your investment portfolio, optimizing savings, and adopting a disciplined approach to wealth accumulation, you can work towards achieving your ambitious financial goal of 3-4 crores by the age of 45. Remember to stay committed to your financial plan, remain patient during market fluctuations, and seek professional guidance when needed to navigate your financial journey effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

Please find pointwise reply to your queries:

1. You already have allocation to small and mid caps through Flexi cap and multicap funds. Despite that you may have additional allocation to One dedicated mid and small cap fund but not two!

The monthly sip's into second small cap and midcap fund may instead be moved to an aggressive hybrid type mutual fund and multi asset allocation type mutual fund.

You may achieve your target with the proposed step up(10%) planned even considering 10% modest returns from MF investments.

2. Funds are okay however you need to review risk-adjusted performance every year with reference to the benchmark and category average and then decide suitably.

3. You may invest additional 5 K in gold mutual fund.

4. Keep contributing to PPF. It's a social security scheme and goes towards sovereign debt in your overall asset allocation.

5. Review past MF holding in line with your overall asset allocation, portfolio overlap, risk adjusted performance and decide as appropriate.

You may select and avoid funds from suggested categories based on risk adjusted performance criteria.

This being a neutral forum we are prohibited to recommend xyz fund.

Happy Investing;