I am 37 years old working in IT sector. Started mutual fund investing recently through SIPs and the following are my holdings.

axis esg equity - 5000/month

axis flexi cap - 3000/month

tata focused equity - 3000/month

uti flexi cap -3000/month

Planning to retire by the age of 50. Advise me on the present investments and the ones to be done to get good wealth creation in the next 10 years.

Ans: You may continue, review after an year

Ans: There are too many funds. Also, Rs 5,600 in 17 years may create 50 per cent of your target corpus.

Ans: The funds chosen are good and have the potential to provide decent returns in the long run.

 

Ans: It's commendable that you've been investing diligently and are seeking ways to improve your portfolio. Let's take a detailed look at your current investments and provide a plan to enhance growth and build wealth over the next 10 years.

Current Financial Snapshot

Income:

Stable monthly income of Rs. 49,000.
Investments:

SBI Bluechip Fund: Rs. 5,000 SIP monthly.
SBI Balanced Advantage Fund: Rs. 3 lakh lump sum.
AB Sunlife ELSS Fund: Rs. 2,000 SIP monthly.
SBI Nifty Equal Weight Fund: Rs. 1 lakh lump sum.
Insurance:

Adequate life and health insurance for yourself and your family.
No Debt:

You thankfully have no debts, which is a strong financial position.
Evaluating Current Portfolio

SBI Bluechip Fund:

Large-cap funds like SBI Bluechip offer stability and moderate growth.
Suitable for long-term goals due to lower volatility.
SBI Balanced Advantage Fund:

Dynamic asset allocation fund balancing equity and debt.
Provides a cushion during market downturns.
AB Sunlife ELSS Fund:

ELSS funds offer tax benefits under Section 80C.
Equity exposure provides higher returns over the long term.
SBI Nifty Equal Weight Fund:

Exposure to a diversified set of large-cap stocks.
Equal weight strategy provides balanced risk and return.
Proposed New Investments

SBI Liquid Fund:

Considered for emergency savings and liquidity.
Low risk, but returns are lower compared to equity funds.
SBI Dividend Fund:

Dividends can provide regular income.
However, dividend income is subject to taxation.
Recommendations for Portfolio Optimization

Emergency Fund and Liquidity

SBI Liquid Fund:
It's a good idea to keep some funds liquid for emergencies.
Aim to build an emergency fund equal to 6 months of expenses.
A monthly SIP of Rs. 5,000 in a liquid fund is reasonable.
Focus on Growth and Wealth Creation

Reallocate to Growth-Oriented Funds:

Increase exposure to equity mutual funds for long-term growth.
Consider multi-cap or mid-cap funds for higher returns.
Systematic Investment Planning (SIP):

Continue with your SIPs and increase them if possible.
Regular SIPs help in rupee cost averaging and benefit from market volatility.
Avoid Dividend Funds for Growth:

Dividend funds distribute earnings, reducing the compounding effect.
Opt for growth funds to maximize wealth accumulation.
Tax-Efficient Investments

Maximize ELSS Investments:
Utilize the Rs. 1.5 lakh limit under Section 80C fully.
Increase your ELSS SIP to Rs. 4,000 monthly for better tax savings and growth.
Review Insurance Policies

Evaluate Life Insurance:

Ensure you have adequate term insurance coverage.
Term plans are cost-effective and provide high coverage.
Health Insurance:

Review and update health insurance to cover medical inflation.
Ensure the sum insured is sufficient for your family’s needs.
Diversification and Asset Allocation

Balanced Portfolio:

Diversify across large-cap, mid-cap, and small-cap funds.
Include debt funds to reduce overall portfolio risk.
Regular Rebalancing:

Review your portfolio every six months.
Rebalance to maintain the desired asset allocation.
Exploring New Investment Avenues

Direct Equity:

If you have the knowledge, consider investing in individual stocks.
Direct equity can offer higher returns but comes with higher risk.
Public Provident Fund (PPF):

Invest in PPF for a safe and tax-free return.
It’s a good long-term investment with tax benefits.
Financial Discipline and Continuous Learning

Maintain Financial Discipline:

Stick to your budget and avoid unnecessary expenses.
Prioritize investments over discretionary spending.
Educate Yourself:

Stay updated on financial markets and investment options.
Attend webinars, read financial blogs, and consider courses on finance.
Final Insights

Achieving your financial goals requires a disciplined and well-rounded approach. Your current investments in mutual funds are a good start. Continue with your SIPs in SBI Bluechip, SBI Balanced Advantage, and AB Sunlife ELSS funds. To improve liquidity, start a SIP in SBI Liquid Fund and build an emergency fund. However, reconsider the SBI Dividend Fund. Instead, focus on growth funds to maximize wealth creation over the long term.

Increase your ELSS SIP to fully utilize the tax benefits under Section 80C. Diversify your investments by including multi-cap and mid-cap funds. Ensure you have adequate life and health insurance coverage. Regularly review and rebalance your portfolio to maintain the desired asset allocation. Stay disciplined with your investments and continuously educate yourself on financial matters.

With these strategies, you can achieve substantial growth and build a robust financial future over the next 10 years. Remember, consistency and informed decision-making are key to long-term financial success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in