Hi .. I am 42 years old.. Have accumulated around 1.3 Crores as of today in MF(51.5 L), PPF/SSY (36 L) and EPF(46 L). Target is to reach around 10 crores in the next 13-15 years. I am a High Risk investor. I am investing in the below mutual funds for a minimum tenure of another 13 years.. UTI Nifty 50 Index (12k), Mirae Asset Large and Midcap (3k), UTI Nifty 200 Momentum 30 (12k), Quant Midcap (35k), Invesco India Midcap (35k) , Quant Small cap (12k), Axis Small Cap (12k), Parag Parikh Flexicap (20k) and Quant Flexicap (20k). Apart from this will continue investing in PPF (1.5 L yearly), Sukanya Samriddhi Yojana (1.5 L yearly) and EPF (3.4 L yearly). Am I aligned to reach the goal with the funds selected or any changes needs to be done. Pls. suggest.

Ans: Current Financial Position
You are 42 years old.

You have accumulated Rs 1.3 crores in various investments.

Mutual Funds: Rs 51.5 lakhs

PPF/SSY: Rs 36 lakhs

EPF: Rs 46 lakhs

You are a high-risk investor.

Your goal is to reach Rs 10 crores in the next 13-15 years.

Assessment of Current Investments
Mutual Funds
Your mutual fund portfolio includes:

Large-cap, mid-cap, and small-cap funds

Flexicap funds

An ETF fund of funds

You are investing significant amounts monthly.

Provident Fund (PF) and Public Provident Fund (PPF)
You have Rs 36 lakhs in PPF/SSY and Rs 46 lakhs in EPF.

These are safe, long-term investments.

Monthly Contributions
You invest:

Rs 1.5 lakhs yearly in PPF

Rs 1.5 lakhs yearly in SSY

Rs 3.4 lakhs yearly in EPF

Evaluating Future Investment Needs
Mutual Fund Selection
Your mutual fund selection is diversified.

You have exposure to large-cap, mid-cap, and small-cap segments.

Index Funds and ETFs
You have invested in an index fund and ETF fund of funds.

Index funds and ETFs follow the market. They do not aim to outperform it.

Actively managed funds aim to outperform the market.

They provide professional management and potentially higher returns.

Consider focusing more on actively managed funds.

Recommendations for Portfolio Optimization
Increase Allocation to Actively Managed Funds
Consider increasing your allocation to actively managed funds.

They offer potential for higher returns and professional management.

Regular Review and Rebalancing
Review and rebalance your portfolio regularly.

Ensure it aligns with your goals and risk tolerance.

Focus on High-Growth Funds
Given your high-risk appetite, focus on high-growth mutual funds.

Mid-cap and small-cap funds can offer significant growth.

Maintain Safe Investments
Continue your investments in PPF, SSY, and EPF.

These provide stability and guaranteed returns.

Evaluate ULIPs
If you have ULIPs, consider their charges and returns.

Surrendering ULIPs and reinvesting in mutual funds might be beneficial.

Professional Guidance
Seek advice from a Certified Financial Planner.

They can provide tailored advice and ensure your investments align with your goals.

Final Insights
You have a well-diversified portfolio.

Focus more on actively managed funds for potential higher returns.

Review and rebalance your portfolio regularly.

Continue with safe investments like PPF, SSY, and EPF.

Consider professional guidance for optimized investment strategies.

Stay focused on your goal of reaching Rs 10 crores.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You're doing a great job with your investments. At 42 years old, you've accumulated around Rs 1.3 crores in various investment avenues. That's commendable. You're on the right track towards your goal of Rs 10 crores in the next 13-15 years. Let’s analyze and evaluate your current investment strategy, its alignment with your goals, and potential areas of improvement.

Mutual Fund Investments: A Deep Dive
Overview and Assessment
You've diversified your mutual fund investments across various categories, which is a good strategy. Here's a closer look:

UTI Nifty 50 Index and UTI Nifty 200 Momentum 30: These funds focus on large-cap stocks and momentum strategies. While they offer stability, they might not match your high-risk appetite. Actively managed funds could provide better returns.

Mirae Asset Large and Midcap: This fund offers a balance between large and mid-cap stocks, providing a mix of stability and growth potential.

Quant Midcap and Invesco India Midcap: Midcap funds offer higher growth potential but come with increased volatility.

Axis Small Cap: Small-cap funds can offer high returns but are riskier. Given your high-risk tolerance, this fits well in your portfolio.

Parag Parikh Flexicap and Quant Flexicap: Flexicap funds provide the flexibility to invest across market capitalizations, which can be beneficial in changing market conditions.

Mirae Asset MidSmall400 Momentum Quality 100 ETF FoF: This fund focuses on momentum and quality factors, aligning with your aggressive investment style.

Analysis and Recommendations
Actively Managed Funds Over Index Funds

Your portfolio includes index funds like UTI Nifty 50 Index. Index funds track market indices, offering average market returns. Actively managed funds can potentially outperform index funds due to skilled fund management, especially in a high-risk strategy. Consider reallocating some investments from index funds to actively managed large-cap funds.

Risk and Reward Balance

You're heavily invested in midcap and small-cap funds, which aligns with your high-risk tolerance. However, ensure you're comfortable with the potential volatility. Maintaining a balance with some stable large-cap or balanced advantage funds could cushion against market downturns.

Regular Monitoring and Adjustments

It's essential to regularly review and adjust your portfolio based on market conditions and fund performance. Consider consulting a Certified Financial Planner (CFP) for personalized advice.

Power of Compounding and Long-Term Growth
Compounding: Your Best Ally
The power of compounding is your best ally in achieving your Rs 10 crore goal. Reinvesting earnings generates earnings on earnings, exponentially increasing your wealth over time. With a 13-15 year horizon, your investments have ample time to grow significantly through compounding.

Systematic Investment Plans (SIPs)
Your SIPs in mutual funds are a disciplined approach to investing, mitigating market volatility and averaging cost. Continue this strategy, as it leverages the power of compounding effectively.

Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY)
Stability and Tax Benefits
Your annual investments in PPF (Rs 1.5 lakh) and SSY (Rs 1.5 lakh) offer stability and tax benefits under Section 80C. These instruments provide guaranteed returns and are risk-free, balancing your high-risk mutual fund investments.

Employee Provident Fund (EPF)
Secure and Reliable
Your EPF contributions (Rs 3.4 lakh yearly) offer a secure, long-term saving avenue with tax benefits. The EPF is a cornerstone for retirement planning, providing a steady growth rate.

Evaluating Your Current Strategy
Alignment with Goals
Your current strategy is robust, focusing on a mix of high-risk, high-reward mutual funds and stable, tax-efficient instruments like PPF, SSY, and EPF. This diversified approach aligns well with your Rs 10 crore goal.

Potential Adjustments
Increase Allocation to Actively Managed Funds: Shift some investments from index funds to actively managed funds to potentially enhance returns.
Diversify Within High-Risk Funds: Ensure your high-risk mutual fund portfolio is diversified across various sectors to mitigate specific sector risks.
Regular Reviews: Conduct regular portfolio reviews and rebalancing to stay aligned with market conditions and personal goals.
Final Insights
Your proactive approach to financial planning is commendable. You've created a diversified portfolio with a mix of high-risk mutual funds and stable, tax-efficient investments. This strategy is well-aligned with your goal of accumulating Rs 10 crores in the next 13-15 years.

Consider the following:

Reallocate some investments from index funds to actively managed funds for potentially higher returns.
Maintain a balance between high-risk and stable investments to cushion against market volatility.
Regularly review and adjust your portfolio to stay on track with your goals.
Stay disciplined with your SIPs and leverage the power of compounding. Your commitment to a long-term investment horizon will pay off.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in