Dear Sir. I am 43 years old. i am a salaried person and my investment plan is for 15 years(Retiring a the age of 58). From Jan 2022 I am doing MF SIP of Rs. 12,000 pm(Increasing at rate of 10% per year). My purpose of investment is for retirement. Presently my monthly SIP in MF is as follows: 1) Canara Robeco Blue Chip Fund(Regular Growth) -- Rs 3,000 p.m. with 10% increase every year. 2) Axis Midcap Fund(Regular growth) - Rs 3,000 p.m. - with 10% increase every year. 3) SBI Small cap Fund(Regular Growth - Rs. 3000 p.m.- Without increase. 4) White Oak Flexi Cap Fund - Rs 2800 p.m. - Without increase. Further i am investing 2 to 5 gram (Lumpsum) in Sovereign Gold Bonds(8 years lock-in) as and when bonds listed for IPO. I want to earn Rs 1,00,000 p.m. after retirement. Please review my portfolio and advise for any change/shift to be done before retirement.

Ans:

Ans: Your portfolio seems diversified across different types of mutual funds, which is a good approach. However, here are some considerations and suggestions:

Diversification: You have exposure to large-cap, mid-cap, small-cap, ethical, and technology funds, which is good for diversification. Ensure you're comfortable with the risk associated with each category.

Review Ethical Fund: While ethical funds align with your values, they may have specific risk-return characteristics. Review the performance of Tata Ethical Fund compared to broader market indices and assess if it aligns with your long-term goals.

Risk Management: Small-cap and technology funds can be more volatile. Ensure you're comfortable with the risk associated with these funds, especially considering your long investment horizon.

Regular Review: Periodically review your portfolio's performance and make adjustments as needed. Keep track of any changes in fund management, strategy, or market conditions that may affect your investments.

Consider Financial Advisor: If you're unsure about your portfolio or need personalized advice, consider consulting with a financial advisor who can provide tailored recommendations based on your financial situation and goals.

Overall, continue investing systematically and stay disciplined with your investment strategy to benefit from the power of compounding over the long term.

Ans: Your portfolio is good just be invested for long term

Ans: Your current portfolio shows a solid mix of funds across various categories. You have SIPs in Flexi Cap, Large & Mid Cap, Emerging Equity, Small Cap, and Active funds. Additionally, you have lump sum investments in Large Cap, Index, Short Term, and Mid Cap funds. This diversification strategy is commendable as it balances risk across different market segments.

However, there are a few areas that could be optimized for better returns and lower risk, especially considering your 10-year retirement goal.

Disadvantages of Index Funds
You've invested a lump sum in an Index Fund. Index Funds track a specific benchmark, usually the Nifty 50 or Sensex. While they have lower expense ratios, they also lack the flexibility to adapt to market changes.

Active funds, on the other hand, allow fund managers to pick stocks that can outperform the market. In the long term, this can result in higher returns. Therefore, considering your retirement goal, shifting from the Index Fund to an actively managed fund might be more beneficial.

Regular Funds vs. Direct Funds
You haven’t specified whether your investments are in regular or direct funds. If you are considering direct funds, it’s important to know their limitations. Direct funds have lower expense ratios, but they don’t come with professional advice.

Certified Financial Planners (CFP) provide guidance, periodic reviews, and help in rebalancing your portfolio based on market conditions and your financial goals. Investing through a CFP ensures your portfolio is always aligned with your objectives.

Evaluation of Your SIPs
Flexi Cap Fund: This is a good choice, providing flexibility to invest across market caps. However, it might be wise to ensure your exposure isn't overly concentrated in any single market cap.

Large & Mid Cap Fund: This fund offers a balance between stability (large caps) and growth potential (mid caps). Continue this SIP as it aligns with your retirement goals.

Emerging Equity Fund: Mid and small caps tend to be more volatile. Consider reviewing this SIP annually to ensure it meets your risk tolerance.

Active Fund: Active funds can outperform benchmarks if managed well. Continue this SIP, but keep track of the fund’s performance.

Small Cap Fund: Small caps can offer high growth but with higher risk. Given your retirement goal, ensure this SIP doesn’t exceed 20% of your total SIPs, as it could add unnecessary volatility to your portfolio.

Assessment of Lump Sum Investments
Large Cap Fund: Large Cap funds are relatively stable, providing consistent returns. This should be a cornerstone of your portfolio.

Index Fund: As discussed, consider switching this to an actively managed fund for better returns.

Short Term Fund: This is a conservative choice, good for parking funds temporarily. However, for long-term growth, these funds may not be ideal.

Flexi Cap Fund: Diversification is key here, and the fund’s flexibility is advantageous. Continue to monitor its performance.

Mid Cap Fund: This fund offers growth potential but with some risk. Ensure this investment complements your overall portfolio strategy without overexposing you to mid-cap volatility.

Increasing Your SIP
Increasing your SIP by Rs 10,000 is a wise decision. Here’s how you might allocate it:

Allocate Rs 5,000 to a Balanced Advantage Fund: This will add stability to your portfolio by balancing equity and debt exposure. It’s a conservative choice that can offer better risk-adjusted returns.

Allocate Rs 5,000 to a Focused Equity Fund: This can potentially offer higher returns as the fund manager focuses on a limited number of high-conviction stocks.

Portfolio Rebalancing and Monitoring
Rebalancing your portfolio regularly is crucial. Markets can be unpredictable, and what works today might not work tomorrow. Review your portfolio every six months to ensure it’s aligned with your risk tolerance and retirement goals.

Final Insights
Your portfolio is well-diversified, but there are opportunities to optimize it further. By shifting from index funds to actively managed funds, and considering the guidance of a Certified Financial Planner, you can potentially achieve better returns. Increasing your SIP is a positive step towards securing your retirement, but make sure to allocate it wisely across different fund categories.

In summary:

Consider shifting from Index Fund to an actively managed fund.

Evaluate your exposure to small caps and ensure it aligns with your risk tolerance.

Invest the additional SIP amount in balanced and focused equity funds.

Regularly rebalance your portfolio and seek guidance from a CFP.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in