I am 33yrs old and have been investing 20k SIP every month in the following funds for the last 10 months (I was investing 10k for 6 months before that): 1. Canara Robeco Bluechip Equity Fund Direct-Growth (3k) 2. PGIM India Midcap Opportunities Fund Direct-Growth (2k) 3. LIC Gold Direct-Growth (3k) 4. Parag Parikh Flexi Cap Fund Direct-Growth (3k) 5. HDFC Index S&P BSE Sensex Direct Plan-Growth (3k) 6. Mirae asset emerging bluechip fund Direct-Growth (2.5k) 7. Quant Tax Plan Direct-Growth (3.5k) In addition to this, I am putting 35k per month as VPF and 1lakh every year in NPS. I am a moderate risk taker. 1. Is this sufficient to build a 3cr corpus in the next 20 years? 2. Should I add a small cap MF to my portfolio and if yes, which one? 3. Is my portfolio over-diversified?

Ans: Hello Value Investor. I can see over diversification with your current investments with sip amount. I would suggest to concise your mf investments and reshuffle the portfolio. Additionally, reconsider Aditya Birla Sun Life Tax Relief 96 Fund , Axis Long Term Equity Fund and SBI Focused Equity Fund for your portfolio. You can achieve your target till retirement with your current sip amount.

Ans: It's great that you're investing your monthly surplus in SIPs to build your wealth.

You have a well-diversified portfolio and the funds in your portfolio are performing well in the current market scenario. In the finance planning of any portfolio, we consider many factors, including client age, risk profile, current asset allocation, etc.

All mentioned funds are performing good and have good potential in long-term. However, UTI MNC Fund - Sectoral funds focus on a specific sector or industry and it is difficult to predict which sector will perform and how long. Hence, we recommend to go for diversified funds to avoid the concentration risk
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If you continue the monthly investment of Rs 18,000 for the next 15 years the accumulated corpus will be 89.92 lakhs approx. at the average growth rate of 12% for 15 years.
Note - the amount may get differ at that time as the actual return can be vary.

Ans: Given your investment strategy and goals, let's address your queries:

Building a 3 Cr Corpus in 20 Years: With disciplined investing and assuming an average annual return of around 12%, your current investment plan has the potential to build a significant corpus over 20 years. However, it's essential to periodically review your portfolio's performance and make adjustments as needed to stay on track towards your target.
Adding Small Cap MF: Adding a small-cap mutual fund can enhance diversification and potentially boost returns over the long term. Look for a well-managed small-cap fund with a consistent track record of performance and aligns with your risk profile.
Portfolio Diversification: While diversification is essential, your portfolio seems adequately diversified across different asset classes and market segments. However, review the performance of each fund regularly and ensure they remain aligned with your investment goals and risk tolerance. Avoid excessive diversification, as it can dilute returns and complicate portfolio management.
Consulting a Certified Financial Planner can provide personalized insights and recommendations tailored to your financial goals, risk tolerance, and investment horizon. They can help optimize your portfolio and develop a strategic plan to achieve your long-term wealth-building objectives effectively.

Ans: That's a very impressive start to your investment journey! A monthly SIP of Rs. 2,50,000 for 15 years shows great commitment. Let's discuss your portfolio and your ambitious target corpus:

1. Large Investment, Great Potential!

Disciplined Approach! Investing such a significant amount consistently shows discipline. This is a key factor for wealth creation.

Diversified Portfolio: Your portfolio has a mix of Mid Cap, Small Cap, Large & Mid Cap, Flexi Cap, and a Sectoral Fund (Energy). Actively managed funds like these have fund managers who try to outperform the market by picking stocks they believe will grow.

Sectoral funds focus on specific industries, amplifying the risk associated with economic fluctuations and sector-specific challenges. Their narrow investment mandate exposes investors to higher volatility and concentration risk.

Additionally, sectoral funds lack diversification, making them vulnerable to adverse market conditions within the targeted sector. Timing the entry and exit points becomes crucial due to the cyclical nature of industries, increasing the complexity of investment decisions.

Overall, while sectoral funds offer potential for higher returns during sector upswings, they entail heightened risk and may not suit investors seeking broad-based diversification and stability in their portfolios.

Direct funds lack personalized advice and ongoing support, requiring investors to navigate the complexities of the market independently. They may lead to suboptimal investment decisions due to the absence of professional guidance.

In contrast, regular funds, accessed through a Mutual Fund Distributor (MFD) with Certified Financial Planner (CFP) support, offer tailored advice aligned with individual financial goals. MFDs provide valuable insights, portfolio rebalancing, and assistance during market fluctuations, enhancing investor confidence and decision-making.

Regular funds also often provide additional services such as goal planning, tax optimization, and periodic reviews, ensuring a holistic approach to wealth management.

2. Reaching Your Target:

Ambitious Goal! Targeting a Rs. 30 crore corpus in 15 years with a 21% XIRR (internal rate of return) is highly ambitious. Historically, Equity has delivered good returns, but there are no guarantees.

Market Performance Matters! Market fluctuations can significantly impact your final corpus. A 21% XIRR might be difficult to achieve consistently over 15 years.

3. Let's Analyze Your Portfolio:

Multiple Mid Cap Funds: Having three Mid Cap Funds might lead to overlapping holdings. Consider merging some for better diversification.

Actively Managed vs. Index Funds: While actively managed funds have the potential for higher returns, they also come with higher fees. A small allocation to an Index Fund could provide broader market exposure.

4. Seek Professional Guidance:

Role of a CFP: A Certified Financial Planner (CFP) can analyze your risk tolerance, investment goals, and assess your portfolio.

Personalized Strategy: A CFP can recommend an optimized portfolio allocation that balances risk and reward to potentially maximize your returns and reach your goals.

Remember, reaching your financial goals requires a well-defined strategy, discipline, and realistic expectations of market returns. Consulting a CFP can help you create a personalized plan and increase your chances of success.

Here's the key takeaway: You've made a fantastic start! Consider consulting a CFP to fine-tune your portfolio and potentially reach your long-term goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in