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40-year-old Woman Aiming for Rs 4 Crore Retirement: What Should I Do With My Investments?

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Financial Planner - Answered on Aug 21, 2024

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Asked by Anonymous - Aug 20, 2024Hindi

I am 40 years old woman working in an MNC. I earn Rs 80,000 as my salary per month out of which Rs 40,000 are my monthly expenses. My goal at retirement is Rs 4 crore. I am investing 20k through SIP in the following Funds: J M Flexi Cap -- 6k Kotak Multi Cap -- 6k Motilal Oswal Mid-cap -- 6k Quant Large and Mid-cap Fund -- 6k Nippon Small Cap Fund -- 6k All my investments are in Direct Funds. My investment period is anywhere between 15 to 20 years and I have a very high-risk appetite. Please advise if I should hold or add new schemes to my portfolio.

Ans: Your current investment strategy shows a well-diversified approach, with a focus on equity funds across various market capitalisations. Given your high-risk appetite and the long investment horizon of 15 to 20 years, you’re positioned to potentially achieve significant growth. However, a few considerations could help optimise your portfolio:

Review of Current Portfolio

1. Diversification: Your current SIP investments cover a broad spectrum of the equity market. You have a mix of large-cap, mid-cap, and small-cap funds, which is generally a good approach to capitalise on different market segments.
2. Fund Selection: The funds you’ve chosen are reputable, but it’s always good to periodically review their performance, fund manager’s track record, and any changes in the fund’s strategy.

Recommendations

a. Review and Rebalance:

1. Performance Check: Periodically review the performance of each fund to ensure they meet your expectations. A fund that has underperformed relative to its benchmark or peers over a significant period might be worth reconsidering.
2. Fund Manager Changes: Be mindful of any changes in the fund management team or strategy. Significant changes might impact the fund’s future performance.

b. Adding New Schemes:

1. Diversification Beyond Equities: Given your high-risk appetite, you might still want to consider diversifying into other asset classes, such as international equities or alternative investments (like REITs or commodities) to reduce risk and enhance returns.
2. Sector-Specific Funds: If you have a strong conviction about specific sectors (like technology, healthcare, etc.), you could consider adding sector-specific funds. However, ensure that your overall portfolio remains diversified.

c. Regular Investments and Adjustments:

1. Increase SIP Amount: As your salary increases or if you find yourself with additional savings, consider increasing your SIP amounts to maximise the compounding effect.
2. Periodic Review: Review your portfolio at least annually. This allows you to adjust for market conditions, personal financial changes, or shifts in investment goals.

d. Consider Tax Efficiency:

1. Tax Planning: Equity mutual funds are generally tax-efficient due to long-term capital gains (LTCG) benefits. However, ensure you are utilising tax-saving investment options like Equity-Linked Savings Schemes (ELSS) if applicable, to optimise your tax liabilities.

e. Example Funds to Consider

If you decide to add new schemes, here are a few types you might consider:

1. International Equity Funds: To gain exposure to global markets.
2. Sectoral/Thematic Funds: If you have a high conviction in specific sectors.
3. Balanced Advantage Funds: For a blend of equity and debt, though this might be less aggressive.

f. Action Plan

1. Continue with your SIPs, but review the performance and consider adding exposure to other asset classes or geographies.
2. Increase your SIP amount gradually as your financial situation improves.
3. Consult a Financial Advisor periodically to ensure your investment strategy aligns with your retirement goals and risk tolerance.
4. Overall, your approach seems sound, but keeping a flexible and informed stance will help you adapt to any changes in the market or your personal financial situation.

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