Hi sir, I am 33.5 years old and want to built a corpus of 5 crore by the age of 40.
My current investment are:
Mutual funds - 37 lac
Fixed deposits of around 50 lac
PPF - 25 lac
Gold and Gold bonds - 20 lac
Indian stocks - 1 lac mainly HDFC
US stocks - 7 lac mainly etfs
This is my and my wifes combines portfolio
For next 6.5 years we will be investing in
Sip - 2 lac per month
PPF - 25k per month
Sovereign Gold - 12g every year
Nifty 50 etf niftybees 30k per month only days when market is down.
Please guide me.
Ans: It's impressive to see your proactive approach towards building wealth and securing your financial future. With a well-diversified portfolio and a systematic investment plan in place, you're on the right track to achieve your goal of reaching a corpus of 5 crore by the age of 40.
Your current investment mix demonstrates a balanced approach, encompassing various asset classes like mutual funds, fixed deposits, PPF, gold, and stocks, both domestic and international. Diversification is key to managing risk and maximizing returns over the long term.
Continuing with your SIPs, PPF contributions, and sovereign gold investments will further strengthen your portfolio's foundation. SIPs in equity mutual funds provide exposure to the equity market, offering the potential for higher returns over time. PPF and sovereign gold investments offer stability and act as a hedge against market volatility.
Your strategy of investing in Nifty 50 ETF during market downturns is commendable as it allows you to capitalize on market opportunities and accumulate units at lower prices, potentially enhancing your long-term returns.
Active vs. Passive Management:
While you've included both actively managed mutual funds and index funds (ETFs) in your portfolio, it's important to understand the differences between the two. Actively managed funds aim to outperform the market through active stock selection and portfolio management, while index funds passively track a specific index's performance.
Benefits of Actively Managed Funds:
Actively managed funds offer the potential for higher returns compared to index funds, especially during market inefficiencies or when skilled fund managers can identify lucrative investment opportunities. Additionally, active management allows for flexibility in portfolio construction and adjustments based on market conditions.
Potential Disadvantages of Index Funds:
While index funds offer low expense ratios and broad market exposure, they may lack the potential for outperformance compared to actively managed funds. Additionally, they're subject to tracking error, which occurs when the fund's performance deviates from the index it's designed to replicate.
Regularly review your portfolio's performance and rebalance as needed to ensure alignment with your financial goals and risk tolerance. Consider consulting with a Certified Financial Planner (CFP) to fine-tune your investment strategy and address any specific concerns or objectives you may have.
Stay disciplined with your savings and investment approach, and continue to monitor market trends and economic indicators. With patience, perseverance, and prudent financial management, you're well-positioned to achieve your target corpus by the age of 40.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in