I am 49 years old and Govt. service holder. I am currently investing in the following funds through SIP and lump sum for last 4 years. Please review my portfolio and suggest if I should continue or change?

1. Sundaram Large and Midcap Fund - Rs. 1500/- SIP
2. Aditya Birla Sun Life Focused Equity Fund - Rs. 1500/- SIP
3. Axis Mid Cap Fund - Rs. 1500/- SIP
4. SBI Flexi Cap Fund - Rs. 1500/- SIP
5. Nippon India Small Cap Fund - Rs. 50,000/- Lump sum (in 2018)
6. Tata Digital India Fund - Rs. 50,000/- Lump sum (in 2019)
7. Axis Small Cap Fund - Rs. 1,00,000/- Lump sum (in 2020)
8. DSP Small Cap Fund - Rs. 50,000/- Lump sum (in 2020)
9. DSP Natural Resources and New Energy Fund- Rs. 1,00,000/- Lump sum (in 2019)

Ans: Too many funds, please consolidate it in 4 to 5 funds

Ans:

Ans: Hello Biju Singh. Using your current sip and lump sum investment, you can achieve 30 lakh corpus in 8 years with an expected CAGR of 14%. As far as the amount is concerned, no modification is necessary.

In addition, I suggest that Axis Bluechip, HDFC Small Cap and Parag Parikh schemes be revisited with respect to their better peer schemes. I hope this resolves your concern.

Ans: Your dedication to investing at such a young age is impressive and sets a strong foundation for your financial future. Let’s review your current portfolio and provide suggestions for optimization.

Portfolio Review
Diversification Across Funds
You have diversified across various categories, including flexi cap, large cap, balanced advantage, mid cap, and small cap funds. Diversification helps in spreading risk and capturing growth from different market segments.

Fund Categories and Allocation
Flexi Cap Funds: These funds offer flexibility to invest across market capitalizations. They balance risk and reward effectively.

Large Cap Funds: Large cap funds are stable and less volatile, providing consistent returns over time.

Balanced Advantage Funds: These funds dynamically manage equity and debt, offering a balanced approach to growth and stability.

Mid Cap Funds: Mid cap funds are riskier but can deliver higher returns than large cap funds. They offer growth potential.

Small Cap Funds: Small cap funds are the most volatile but can provide significant growth over the long term.

Recommendations for Portfolio Optimization
Assessing Risk and Returns
Your portfolio is well-diversified but leans towards higher risk with significant exposure to mid and small cap funds. At your age, a higher risk tolerance is understandable, but it’s crucial to maintain a balance.

Adjusting Fund Allocation
Increase Allocation to Large Cap and Balanced Advantage Funds: These funds provide stability and consistent returns. Increasing your investment in these funds can balance the risk from mid and small cap funds.

Review Flexi Cap Funds Allocation: You have a substantial allocation to flexi cap funds. Ensure these funds are performing well and meeting your investment goals.

Monitor Mid and Small Cap Funds: Keep an eye on the performance of mid and small cap funds. Consider reducing exposure if they are too volatile for your risk tolerance.

Regular vs. Direct Funds
Investing through regular funds with the help of a Certified Financial Planner ensures you receive expert guidance. This helps in making informed decisions and optimizing your investment strategy.

Long-Term Investment Strategy
Goals and Time Horizon
Identify your financial goals and time horizon. Long-term goals like retirement or buying a house can tolerate higher risks. Short-term goals require safer investments.

Systematic Investment Plan (SIP)
Continue with your SIPs to benefit from rupee cost averaging. This reduces the impact of market volatility and helps in disciplined investing.

Emergency Fund
Ensure you have an emergency fund covering 6-12 months of expenses. This provides financial security in case of unforeseen events.

Health and Life Insurance
Consider getting adequate health and life insurance coverage. This protects your investments and provides financial security to your family.

Conclusion
Your proactive approach to investing is excellent. By adjusting your fund allocation and maintaining a balanced risk profile, you can achieve your financial goals more effectively. Regular reviews and guidance from a Certified Financial Planner will ensure your investments stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in