I am 38 and my wife is 37 years of age. We both combined earn close to Rs 1.50 lakh. I recently got to know about you. We have been investing in mutual funds since 2019, started with initial investment of Rs 7k which slowly and gradually now stand Es 21k monthly. I would like to know / understand your views on active SIPs.

Below are my goals. 

Elder son’s study Rs 80 lakh to 1.20 cr year by 2034-35. Current age 7

Younger son’s study rs 1cr to 1.5 cr year by 2037-2038. Current age 3

Marriage of both sons Rs 1.20 cr b/w year 2039-2042

Retirement corpus of Rs 7.5 cr to 9 cr at the age 58.

Combined SIP portfolio:

Aditya birla sun life tax relief fund Rs 2000 Dec'18.

Kotak flexi cap fund Rs 3000 Dec'18.

Nippon india equity hybrid fund Rs 2000 Dec'18.

Edelweiss balanced advantage Rs 2000 Aug'20

Invesco India Tax Plan Rs 1000 Aug'20

Axis blue-chip fund Rs 1000 Sep'20

Tata Flexi cap fund Rs 1000 Sep'20

Axis blue-chip fund Rs 2000 Apr'21

Edelweiss small cap fund Rs 1000 Apr'21

HSBC Focused Fund Rs 2000 May'22

Nippon India US equity opportunities Rs 1000 Sep'22

NJ balanced advantage fund Rs 3000 Dec'21

NIPPON India Flexi cap fund one time investment of Rs 20k

Apart from above mentioned SIPs I have few more investments eq. NSC ( investment value Rs 2.4 lakh) low ROI since couple of years, NPS, LIC, PPF, PF, and have stated adding few stock since last 2 months Current standing is Rs 30k with Loss of Rs 2k. 

Liabilities: Have taken home loan of Rs 42 lakh last month and emi of Rs 38k will be paid jointly. (60% me and 40% brother).

Request you to review and share your valuable feedback 

Ans: You can invest in small and midcap funds as your goal is long term. SIP for 30k may give you 10 cr if calculated @12% CAGR

Ans: At 40, retirement planning is crucial. Your goal of Rs. 5 crore is achievable with disciplined investing. You've chosen a set of mutual funds and invest Rs. 30,000 per month through SIP. Your investment horizon is 20-22 years, and you have a high-risk appetite.

Portfolio Assessment
Diversification: You've spread your investments across flexi-cap, multi-cap, mid-cap, large and mid-cap, and small-cap funds. This diversification is good, as it balances growth and risk.

Risk Alignment: Given your high-risk appetite, investing in mid-cap and small-cap funds is suitable. These funds have the potential for higher returns, although they carry more volatility.

Investment Horizon: With a 20-22 year horizon, your portfolio has the time to recover from market fluctuations. This makes it more likely to achieve your Rs. 5 crore goal.

Consideration of Direct Funds
Disadvantages of Direct Funds: Direct funds might seem cost-effective due to lower expense ratios. However, managing them without professional guidance can be risky. Market conditions and fund performance require regular monitoring, which might be challenging without expert support.

Benefits of Regular Funds: Investing through a Mutual Fund Distributor (MFD) who holds a Certified Financial Planner (CFP) credential can offer professional advice. Regular funds may have slightly higher costs, but the guidance provided can be invaluable in maximizing returns and minimizing risks.

Evaluating Fund Categories
Flexi-Cap Fund: Flexi-cap funds provide flexibility across market capitalizations. This adaptability helps in capturing growth in different market phases.

Multi-Cap Fund: Multi-cap funds are similar to flexi-cap but with a more balanced approach. They invest across large, mid, and small-cap stocks, providing a diversified growth opportunity.

Mid-Cap Fund: Mid-cap funds can offer higher returns but come with greater volatility. Since you have a long-term horizon and high-risk appetite, this choice aligns well with your goals.

Large and Mid-Cap Fund: This fund combines the stability of large-cap stocks with the growth potential of mid-cap stocks. It can provide a balanced risk-return profile, suitable for long-term wealth creation.

Small-Cap Fund: Small-cap funds are the most volatile but can offer significant returns over the long term. Given your high-risk tolerance and extended investment horizon, including a small-cap fund is appropriate.

Suggestions for Your Portfolio
Continue Investments: Your current portfolio is well-diversified and aligns with your risk appetite and financial goals. Continue with your SIPs, but consider reviewing your investments periodically.

Switch to Regular Funds: Given the complexity of managing direct funds, it may be wise to switch to regular funds. A CFP can provide valuable insights, optimize your portfolio, and help you stay on track to achieve your Rs. 5 crore goal.

Monitor Performance: Regularly review your portfolio's performance. Market conditions change, and periodic adjustments might be necessary. Professional guidance will ensure that these adjustments align with your long-term goals.

Wealth Creation Strategy
Systematic Approach: Continue with your SIPs consistently. The power of compounding will work in your favor over the 20-22 year horizon.

Risk Management: While you have a high-risk appetite, it's essential to manage this risk effectively. Diversification, as you've done, is key, but regular monitoring and adjustments are equally important.

Professional Guidance: Consider consulting a CFP who can provide personalized advice. They can help you optimize your investments, ensuring that you achieve your Rs. 5 crore goal with minimal stress.

Final Insights
Portfolio Strength: Your current portfolio is strong and well-aligned with your goals. Continue investing but consider switching to regular funds for professional guidance.

Long-Term Focus: Keep your long-term goal in mind. Stay consistent with your investments and seek periodic advice from a CFP.

Retirement Goal: With disciplined investing and proper guidance, your Rs. 5 crore retirement goal is within reach. Ensure that your portfolio remains aligned with your financial objectives and risk tolerance over the years.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in