I am 32 years old and i wanted to plan for my retirement. Currently i am investing 2500 in parag flexi cap, 2200 in motilal Oswal S & P index fund, 2000 both in quant small cap and axis small cap. I have stopped navi 50 index (as it was overlapping 70% with parag flexi cap) and DSP midcap nifty 150 quality 50 index fund. I wanted to invest around 5k more and will request your assistance in suggesting 2 or 3 mutual funds for around 20-24 years more.

Ans: These are good funds, please continue

Ans: Considering your investment horizon and retirement goal, you may want to focus on equity-oriented mutual funds for potentially higher returns over the long term. Since you have a relatively smaller investment amount, you could consider starting with one or two well-diversified equity funds such as large-cap or multi-cap funds. Look for funds with a proven track record of consistent performance and low expense ratios. Additionally, consider funds with a strong focus on risk management to ensure stability in your investment journey.

Ans: Since you're open to taking risks and have a long investment horizon for your retirement corpus, investing in small-cap, mid-cap, and thematic funds can potentially offer higher returns over the long term. Here are some suggestions for funds to consider:

Small-cap Funds: These funds invest in stocks of small-sized companies with high growth potential. Consider reputable funds with a consistent track record of performance in this category.
Mid-cap Funds: Mid-cap funds focus on stocks of medium-sized companies, offering a balance of growth potential and risk. Look for funds managed by experienced fund managers with a strong track record.
Thematic Funds: Thematic funds invest in sectors or themes expected to perform well over time. Choose themes aligned with your investment objectives and outlook for future growth.
Regarding Quant Fund House, while they may offer innovative investment strategies, it's essential to conduct thorough research on their fund offerings, track record, and investment approach. Ensure they align with your risk profile and long-term goals before investing.

Lastly, consider diversifying your investments across multiple funds and asset classes to spread risk and maximize potential returns. Regularly review your portfolio and make adjustments as needed to stay aligned with your investment objectives. Consulting with a Certified Financial Planner can provide personalized advice tailored to your specific financial situation and goals.

Ans: Your disciplined monthly investment of Rs. 60,000 is praiseworthy. Let’s evaluate your portfolio, goal alignment, and fund selection comprehensively.

Reviewing Your Goal of Rs. 2 Crore for Retirement
Saving Rs. 2 crore at 34 years is a prudent goal.

Long-term investing in mutual funds can help achieve this target.

Your monthly SIPs already reflect consistent financial planning.

Portfolio Overview
Mirae Asset ELSS Fund – Rs. 20,000
Advantages: ELSS funds offer tax-saving benefits under Section 80C.

Performance: Typically strong long-term performance due to diversified large-cap and mid-cap exposure.

Suitability: Good for long-term wealth creation while reducing taxable income.

Insight: Continue if tax-saving is a priority; else, consider reallocating to non-tax-saving funds.

Parag Parikh Flexi Cap Fund – Rs. 20,000
Advantages: Globally diversified and invests across market caps.

Performance: Consistent long-term returns with relatively lower volatility.

Suitability: Aligns well with your retirement goal due to flexibility and global exposure.

Insight: Suitable for steady long-term wealth accumulation.

Quant Active Fund – Rs. 20,000
Advantages: Focuses on active, high-conviction stock picking.

Performance: High growth potential but with greater volatility.

Suitability: Adds aggressive growth potential to your portfolio.

Insight: Retain for higher returns if you can tolerate short-term fluctuations.

Strengths of Your Current Portfolio
Diversification: Good mix of tax-saving (ELSS), global diversification, and active management.

Growth Potential: Suitable allocation for long-term wealth creation.

Goal Alignment: Investments align with your Rs. 2 crore retirement goal.

Consistency: Rs. 60,000 monthly SIP reflects disciplined investing.

Improvements for Better Portfolio Optimisation
Address Overlap
Review funds to ensure minimal overlap in stock holdings.

Excessive overlap can reduce diversification benefits.

Evaluate Risk-Reward
Quant Active Fund carries higher risk.

Consider capping exposure to aggressive funds at 25%-30% of the portfolio.

Tax Efficiency
ELSS locks in investments for 3 years.

If tax-saving is not a priority, explore other diversified equity funds.

Consider Adding a Mid-Cap Fund
Mid-cap funds provide a good balance of risk and reward.

They complement large-cap and flexi-cap investments.

Monitoring and Rebalancing
Regular Reviews
Review your portfolio annually to assess performance and alignment with goals.

Replace underperforming funds with better alternatives, if necessary.

Rebalancing
Adjust fund allocation if your risk tolerance or goals change.

Maintain equity exposure at 80%-85% for long-term growth.

Taxation Insights
Equity Mutual Funds
LTCG above Rs. 1.25 lakh is taxed at 12.5%.

STCG is taxed at 20%.

Tax Planning
Use tax benefits from ELSS funds wisely.

Avoid selling investments unnecessarily to minimise tax outflows.

Final Insights
Your portfolio is well-constructed for achieving your retirement goal. Focus on periodic reviews, minimal overlap, and risk adjustment for optimal results. Adding a mid-cap fund can enhance growth potential further. Continue disciplined SIPs to secure your financial future.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment