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Ramalingam Kalirajan |10879 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 08, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Jul 31, 2025Hindi

I am 37 years old investor and I have been investing in equity mutual funds from 2019 .I have built a portfolio of 55 lakhs which are randomly spread across 23 mutual funds . I am earning 1.6 lakhs inr per month . Now I see that my portfolio is not optimised to generate best return .I want to secure 3 cr for my child education, 5 cr for retirement and 4 cr for home purchase . Please suggest and build a portfolio with best mutual funds in its category with consistent higher growth for next 5 ,10 and 15 years ? Also provide the details for strategy on how to rebalance the current portfolio with each steps in details and also how is my financial state being 37 years old and planning to retire by next 15 years.

Ans: You have done very well to save Rs 55 lakhs in equity mutual funds at 37. Your income of Rs 1.6 lakhs per month also gives you good scope to plan for multiple goals. Your consistency since 2019 shows strong discipline. With some restructuring and clarity, your portfolio can serve you better.

Let us go step by step in detail.

» Present financial state

At 37, you are in a good position.

You have built wealth early and created Rs 55 lakhs corpus.

Your income is stable and gives room for future investments.

Your goals are ambitious but achievable with careful planning.

Retirement at 52 is possible if you stay disciplined.

Your spread across 23 funds shows interest but lacks focus.

Too many funds create overlap and dilute growth.

You need sharper allocation for better compounding.

» Current portfolio concerns

23 mutual funds are excessive for any investor.

Many of them will hold the same stocks, reducing uniqueness.

Over-diversification creates average returns instead of strong ones.

Monitoring so many funds is difficult and confusing.

Some funds may be underperforming, pulling down your gains.

Random mix reduces the chance of consistent long-term growth.

You need consolidation into fewer high-quality funds.

This will give clarity, discipline, and focused compounding.

» Future financial goals

Child education target is Rs 3 crore.

Retirement target is Rs 5 crore.

Home purchase target is Rs 4 crore.

Combined, you need Rs 12 crore in 15 years.

These goals are heavy but not impossible.

With right SIP discipline, you can reach them.

Returns from equity can be harnessed well with focus.

A balanced approach will help you avoid unnecessary risks.

» Goal priority analysis

Home purchase is usually first in Indian families.

But retirement should always come before home.

Child education is time-bound and cannot be delayed.

Hence, education and retirement need higher attention.

Home can be managed with a mix of corpus and EMI.

Splitting goals with timelines will reduce stress.

Planning each goal with specific buckets is important.

» Suggested portfolio structure

You should consolidate from 23 to around 6–8 funds.
Each fund should have a clear role in your goals.
You need a mix of large cap, flexi cap, mid cap, small cap, and hybrid.

Large cap: For stability and lower risk growth.

Flexi cap: For dynamic allocation across market caps.

Mid cap: For faster growth over 10+ years.

Small cap: For high growth but with limited exposure.

Hybrid / balanced advantage: For cushioning volatility.

This way you can target higher growth but manage risk.

» Actively managed funds over index funds

You mentioned best in category funds.

Many investors look at index funds for simplicity.

But index funds just copy the market.

They cannot beat the market, only follow it.

In volatile times, they fall as much as market.

Actively managed funds, with strong managers, can control downside.

They can book profits early and shift to safe sectors.

They can also capture new growth sectors quickly.

For long term investors like you, active funds give better chance.

Consistency and proven track record matter more.

» Regular funds over direct funds

Many people get tempted by direct funds to save commission.

But in reality, direct funds can cause poor decisions.

Investors lack guidance to choose or exit correctly.

A Certified Financial Planner ensures alignment with goals.

Regular funds allow structured review and disciplined rebalancing.

Wrong fund selection in direct plans may cost more than commission saved.

Regular plans with expert handholding create smoother compounding.

» Step-by-step rebalancing

You can follow this process to restructure:

Identify best performing funds across categories.

Retain only 6–8 high-quality funds.

Exit underperforming or duplicate funds in a phased manner.

Redeem only those units where performance is weak for 3 years.

Avoid selling everything at once, do it step by step.

Shift redeemed amount into your chosen strong funds.

Align SIPs to the chosen core funds only.

Stop SIPs in redundant funds.

Reinvest future SIPs into core portfolio with discipline.

Review yearly to check performance.

» Suggested allocation strategy

35% in large cap and flexi cap together.

25% in mid cap funds.

15% in small cap funds.

15% in hybrid or balanced advantage funds.

10% in debt allocation for emergency and stability.

This structure balances risk and return.

» Goal-wise allocation strategy

Child education (10 years left): Higher allocation to mid and flexi cap.

Retirement (15 years left): Mix of flexi, mid, and small caps.

Home purchase (15 years left): Balanced with equity and hybrid.

Emergency needs: Separate in debt or liquid funds.

This goal-based bucket system reduces panic during market falls.

» SIP discipline going forward

Increase SIPs from your Rs 1.6 lakh salary.

At least Rs 60,000–70,000 monthly towards these goals.

Keep child education SIP separate and untouched.

Keep retirement SIP as a long-term compounding engine.

Home SIP can be partly shifted to hybrid funds.

Review annually to adjust SIP amounts as income grows.

» Review and monitoring

Review portfolio once in a year only.

Avoid frequent changes as it breaks compounding.

Compare fund performance with category peers.

Retain only consistent performers over 3–5 years.

If a fund lags peers consistently, replace it.

Always keep rebalancing aligned to your goals.

» Insurance and risk cover

Ensure you have term insurance for at least 15–20 times income.

Health insurance for entire family is compulsory.

Do not mix insurance and investment.

If you hold ULIPs or LIC endowment, surrender them.

Reinvest those proceeds into mutual funds.

This will create higher returns and reduce leakage.

» Tax efficiency planning

Equity mutual funds enjoy better taxation.

Long term capital gains above Rs 1.25 lakh taxed at 12.5%.

Short term capital gains taxed at 20%.

Debt funds taxed as per your income slab.

For goals under 3 years, use debt or liquid funds.

For goals beyond 5 years, stick to equity mutual funds.

Always redeem with tax impact in mind.

» Retirement readiness assessment

Retirement corpus target is Rs 5 crore.

At 37, with 15 years horizon, you can build it.

Your current corpus and SIPs will grow well if disciplined.

Do not reduce equity allocation before retirement.

Shift partly into hybrid only near age 50.

Secure pension-like income through mutual fund SWP later.

Focus on growth now, not safety.

» Child education readiness

10 years is short for Rs 3 crore target.

You need aggressive SIPs in mid and flexi cap funds.

Start with Rs 25,000–30,000 SIP for this goal.

Do not use this corpus for any other purpose.

Shift to debt funds when child reaches age 16.

This ensures safety of corpus before use.

» Home purchase readiness

For Rs 4 crore home, you may need partial EMI support.

Build a part corpus in hybrid and equity funds.

Keep flexibility to borrow partly at that time.

Avoid locking too much into illiquid assets.

Do not compromise retirement goal for home.

Keep this as a third priority after education and retirement.

» Finally

You are on a strong track at 37 with Rs 55 lakhs.
By consolidating funds, increasing SIPs, and focusing on goals, you can achieve Rs 12 crore.
Stay disciplined, invest through Certified Financial Planner, and review yearly.
Avoid index and direct funds as they reduce your growth potential.
Prioritise goals smartly, and let compounding do the work for you.

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

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

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

Name of the Fund	Category	RankMF Star Rating
Kotak Emerging Equity Growth	Equity - Midcap Fund	4
SBI Magnum Midcap Fund Growth	Equity - Midcap Fund	4