I am 34 yrs old and have started my mutual fund journey on 4/11/2021. I have an idle corpus of 10 lakh and had kept aside 5 lakh for my emergency needs. I need to invest appropriately to meet these needs.

1. Child's education and related needs (2 kids - timeline 15 years) - 1 crore

2. Retirement corpus (20 yrs) - 5 crore

I decided to be very aggressive as I was quite late to the mutual fund scene and invested lump sum with a time horizon of 5 years. This is my current portfolio:

1. ICICI Prudential Technology Direct Plan Growth - Rs.50000

2. PGIM India Flexi Cap Fund Direct Growth - Rs.50000

3. Parag Parikh Flexi Cap Fund Direct Growth - Rs.50000

4. Axis Small Cap Fund Direct Growth - Rs. 50000

5. SBI Contra Direct Plan Growth - Rs.50000

Apart from the above, I also have PF contribution from employer, life insurance plans and a traditional plan which takes up 1 lakh per annum.

I can set aside 40000 per month for SIPs and 10 lakh must be utilised for lump sum investment. Please advise.

Ans: Use SIP mode; these funds may be considered:

Ans: Please continue, we can review after 1 year

Ans: Funds are good, please continue, don’t increase funds; if you need to top up, do in the existing schemes.

Ans: Assessment of Current Portfolio
Your current mutual fund portfolio is well-diversified. It includes technology, flexi cap, mid cap, small cap, and balanced funds. Here’s a detailed assessment:

Mutual Fund Investments
ICICI Pru Technology Fund: Monthly SIP of Rs. 1000. This fund focuses on the technology sector. It can offer high growth but comes with sector-specific risks.

Parag Parikh Flexi Cap Fund: Monthly SIP of Rs. 3000 and a lump sum of Rs. 65000. This fund is diversified across large, mid, and small caps. It aims to achieve long-term growth.

ICICI Pru Bharat 22 FOF: Lump sum of Rs. 80000. This fund invests in the Bharat 22 Index, focusing on diversified sectors.

Motilal Oswal Mid Cap Fund: Lump sum of Rs. 70000. Mid cap funds can offer high returns but are more volatile than large cap funds.

Franklin India Focused Equity Fund: Lump sum of Rs. 60000. This matured fund is still held, focusing on a limited number of stocks.

Canara Robeco Small Cap Fund: Lump sum of Rs. 75000. Small cap funds have high growth potential but are very volatile.

ICICI Pru Equity FOF: Lump sum of Rs. 70000. This fund invests in other equity funds, offering diversified equity exposure.

ICICI Pru Balanced Advantage Fund: Lump sum of Rs. 50000. This fund balances between equity and debt, offering stability.

ICICI Pru Medium Term Bond Fund: Lump sum of Rs. 35000. This fund focuses on medium-term debt securities, providing steady returns with lower risk.

Portfolio Growth Potential
Current Portfolio Value: Rs. 8,52,645.

Gain/Loss: Rs. 2,22,677.

Strategic Recommendations
Increase Equity Exposure
Focus on Growth: Continue investing in equity mutual funds. They offer high growth potential over the long term.

Balanced Approach: Maintain a balance between large, mid, and small cap funds.

Reduce Sector-Specific Risk
Diversify Further: Avoid concentrating too much in one sector like technology. Spread investments across various sectors.
Regular Investments
SIPs and Lumpsums: Continue SIPs as much as possible. Invest lump sums when you receive them.

Consistency: Consistent investments help in rupee cost averaging and compounding.

Avoid Index Funds
Disadvantages: Index funds follow the market passively. They lack active management and can’t outperform the market.

Active Management Benefits: Actively managed funds have professional managers. They aim for higher returns by adapting to market conditions.

Drawbacks of Direct Funds
No Advisory Support: Direct funds lack guidance from certified planners. Regular funds offer professional advice.

Complex Management: Managing direct investments requires market knowledge. Regular funds managed by CFPs are more suitable.

Financial Goals and Liquidity
Goal Alignment
Long-Term Goals: Align your investments with your long-term goals. Focus on creating a corpus for your child’s education and your retirement.
Emergency Fund
Maintain Liquidity: Keep an emergency fund for unforeseen expenses. This should cover at least six months of expenses.
Health and Life Insurance
Personal Mediclaim
Buy Health Insurance: Purchase a personal health insurance policy. Ensure it covers critical illnesses and hospitalisation.
Life Insurance
Adequate Coverage: Ensure your term plan coverage is sufficient. This should meet your family’s needs in case of any eventuality.
Final Insights
Your portfolio is well-diversified and shows good growth potential. Focus on equity mutual funds for long-term growth. Avoid index and direct funds. Maintain consistency in SIPs and invest lumpsum amounts when possible. Align investments with long-term goals and ensure adequate insurance coverage.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in