Hi Sir, I am 37 yrs old and very new to mutual fund and SIP. I want to build a corpus of 3 cr. by the age of 60. Also I would need 30 lakh for my child’s education in next 14 years. What should I do plz advice?

Ans: Hi Prachi. Considering your requirements, to achieve a corpus of 5 Cr you can start a sip of Rs. 37000 for next 20 years. For your portfolio, you may refer below mentioned schemes:

• Nippon India Growth Fund
• Kotak Small Cap Fund
• PGIM India Flexicap Fund
• ICICI Pru Bluechip Fund

Ans: It's commendable that you've been consistently investing in mutual funds through SIPs for several years, laying a strong foundation for your retirement. Let's evaluate your current investment strategy and make adjustments to align with your retirement goal.

Your portfolio reflects a diversified mix of small-cap, mid-cap, and flexi-cap funds, which offer growth potential over the long term. However, given your goal of building a substantial corpus for retirement, we may need to reassess your asset allocation and make some adjustments.

Firstly, let's review your SIP amounts and consider increasing them gradually to accelerate wealth accumulation. Since your SIPs increase by 5% to 10% annually, this incremental growth can boost your investment corpus significantly over time.

Consider reallocating some of your SIP amounts to funds with a proven track record of consistent performance and lower volatility. While small-cap and mid-cap funds can offer higher returns, they also come with increased risk. Diversifying across large-cap funds or balanced funds can provide stability to your portfolio.

Moreover, review your overall asset allocation to ensure it remains aligned with your risk tolerance and investment objectives. While equity investments offer growth potential, it's essential to balance them with fixed-income securities like debt funds or PPF to mitigate risk.

Given your age and retirement horizon, periodically reassess your investment strategy and make necessary adjustments to stay on track towards your goal. Consider consulting with a Certified Financial Planner to develop a personalized retirement plan tailored to your needs and aspirations.

In conclusion, by fine-tuning your investment strategy, increasing your SIP amounts, and maintaining a disciplined approach, you can work towards achieving your retirement goal of building a corpus of Rs 6 - 7 crores by the age of 58.

Best Regards,

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

Ans: You are on a strong financial path. At 20 years old, investing Rs. 10,000 monthly in equity mutual funds is a smart move. Starting early gives you the power of compounding, which is essential for wealth creation.

Equity mutual funds are good for long-term growth. They offer higher returns compared to other asset classes. However, they also come with higher risk. But since you are young, you can afford to take this risk.

Let's analyse your goal of building a Rs. 50 crore corpus in 30 years.

Analysing the Target
Goal Ambition: A corpus of Rs. 50 crore in 30 years is ambitious but achievable. However, it requires disciplined investing and periodic reviews.

Current Contribution: You are currently investing Rs. 10,000 per month. With time, your income will increase. Therefore, you should increase your SIP amount gradually.

Expected Returns: Equity mutual funds can give an average return of 12% to 15% per annum. If the market performs well, you could achieve your target. However, remember that markets are unpredictable. So, it's wise to review your portfolio regularly.

The Power of Compounding
Starting Early: You have started investing at 20 years. This gives you a huge advantage. Compounding will work its magic over the next 30 years.

Regular Investments: SIPs allow you to invest regularly. This averages out market volatility, reducing risk. By sticking to this habit, you will see your money grow over time.

Increasing SIP Amount: To achieve a Rs. 50 crore corpus, you may need to increase your SIP contribution over the years. Start small, but aim to increase your SIPs as your income grows.

Diversifying Your Portfolio
Equity Funds: These are good for long-term growth. But it's important to diversify. Don't put all your money in one type of fund.

Mid and Small-Cap Funds: These funds offer higher growth potential but with more risk. Consider adding them to your portfolio gradually.

Avoiding Index Funds: Index funds track the market and provide average returns. They lack the active management needed for higher growth. Actively managed funds, with a skilled fund manager, can potentially outperform the market.

Regular vs. Direct Funds: Direct funds have lower expense ratios. But managing them requires knowledge and time. Investing through a Certified Financial Planner with regular funds is better. They provide guidance and help you make informed decisions.

Monitoring and Adjusting Your Strategy
Review Regularly: Markets change, and so do your financial goals. Review your portfolio at least once a year. This will help you stay on track and make necessary adjustments.

Increasing Contributions: As you grow older, your earning potential will increase. Gradually increase your SIP contributions. This will help you achieve your Rs. 50 crore goal faster.

Adjusting Asset Allocation: As you approach your goal, consider shifting to less risky assets. While equity funds are good for growth, they can be volatile. Moving some of your corpus to safer instruments will protect your wealth.

Risk Management
Insurance Coverage: Ensure you have adequate life and health insurance. This protects your investments in case of unforeseen events. Without proper coverage, you might have to dip into your investments during emergencies.

Emergency Fund: Build an emergency fund that covers 6-12 months of expenses. This should be separate from your investment portfolio. An emergency fund protects your investments by providing liquidity during tough times.

Planning for Long-Term Wealth Creation
Disciplined Approach: Stick to your SIPs even during market downturns. Market corrections are opportunities for long-term investors. Your disciplined approach will reward you over time.

Focus on Growth: Early in your investing journey, focus on growth-oriented funds. As you get closer to your goal, shift towards stability. This ensures your hard-earned corpus is protected.

Avoiding Unnecessary Expenses: Keep your investment journey simple. Avoid high-expense funds and unnecessary charges. This will ensure that more of your money is working towards your goal.

Final Insights
Consistency is Key: Continue your SIPs regularly. Increase your contribution as your income grows. This consistency is crucial for reaching your Rs. 50 crore goal.

Diversify Smartly: Add mid and small-cap funds to your portfolio for higher growth. But keep an eye on risk. Balance your portfolio based on market conditions and your risk appetite.

Review and Adjust: Regularly review your portfolio with a Certified Financial Planner. Adjust your strategy based on your life stage and market conditions.

Stay Focused: Don't get distracted by market noise. Stay focused on your long-term goal. Your early start, disciplined approach, and regular reviews will help you achieve financial success.

Best Regards,

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