I am 56 year old & investing for 5 years. Target is 1 crore

Ans: You are on the right track already.

Three SIPs in equity mutual funds. Consistent EPF and VPF contributions. A strong goal of Rs 3.5 Cr in 10 years.

Let us now assess this from all angles and build clarity.

? Your Investment Commitment So Far

– You are currently investing Rs 35,000 monthly in equity mutual funds.

– Fund choices cover flexi-cap, multi-cap, and small-cap categories.

– This gives you diversification across large, mid, and small companies.

– Your PF is Rs 10 lakh and VPF contribution is Rs 7,000 monthly.

– These fixed-income instruments add safety to your portfolio.

– You are 36 now and have a 10-year horizon. That’s perfect for growth investing.

– Having 2 children aged 8 and 10 adds clarity to your timeline and purpose.

– Your target of Rs 3.5 Cr in 10 years is ambitious but achievable with the right steps.

? How to Evaluate Your Current Strategy

– Your fund selection across market segments is well-structured.

– One large-and-flexi cap fund is enough. Don’t add another in this category.

– The multicap adds further spread across market caps. It works for long-term goals.

– The small-cap fund brings high-growth potential, but also higher volatility.

– Keep investing in it. But avoid increasing exposure further.

– The SIP amount of Rs 35,000 is a strong monthly commitment.

– Your PF and VPF add another Rs 7,000. So, total monthly investments are Rs 42,000.

– That totals Rs 5.04 lakh per year. Over 10 years, that’s more than Rs 50 lakh in capital.

– With long-term compounding, you can get close to your Rs 3.5 Cr goal.

– But you must invest consistently without skipping SIPs.

– Also increase your SIP every year by 10-15% to stay on track.

– Don’t reduce SIP when markets are down. Stay invested to ride the cycles.

? Don’t Choose Index Funds or Direct Funds

– Some investors shift to index funds thinking it’s cheaper.

– But index funds simply copy the market. No active decision-making.

– They fall hard when market falls. No protection or buffer.

– They cannot outperform in sideways or falling markets.

– Index funds work only in developed markets, not in India.

– Indian markets are not efficient. So active funds do much better here.

– Stick to actively managed funds. They give long-term outperformance.

– Choose regular plans over direct plans.

– Direct plans do not give guidance, reviews, or personalised support.

– With regular plans, a certified financial planner helps you review your portfolio.

– Rebalancing, switching, and ongoing alignment are done with expert help.

– DIY investing may miss emotional control, fund quality checks, and tax planning.

? How to Improve Your Portfolio for 10-Year Goal

– Keep the current three funds. They cover core equity exposure well.

– Do not add new funds unless your SIP increase demands diversification.

– Increase SIPs every year as income grows.

– Target to reach Rs 60,000 monthly SIP in 3 years.

– This will help you offset inflation and reach Rs 3.5 Cr faster.

– Do a yearly portfolio review to track performance and goal alignment.

– Replace underperformers only after 3 years of consistent underperformance.

– Don’t judge based on 6-12 month returns. Funds need time to deliver.

– Rebalance between equity and fixed income every 2 years.

– This will control risk and optimise returns.

– Use separate mutual fund folios for kids’ education and your retirement.

– This will help you track goals better.

– Label each SIP and map them to your goals.

? Your Fixed Income Allocation – PF and VPF

– EPF and VPF add stability to your plan.

– PF balance of Rs 10 lakh is already a good foundation.

– Monthly VPF of Rs 7,000 adds further boost to debt allocation.

– VPF is tax-free and gives compounding returns over time.

– Continue this contribution. Increase it gradually if salary increases.

– Your PF will act as a solid base during retirement or early retirement.

– But don't depend only on PF for long-term wealth.

– Equity mutual funds will play the bigger role in growth.

– PF+VPF can be your capital preservation block. Mutual funds are your growth block.

? Protecting Your Goals – Insurance and Emergency Backup

– Check if you have term insurance. Cover must be at least 15 times your income.

– If not already done, get a separate term plan. Only pure term, no returns.

– Health insurance for family is a must. Don’t depend only on employer cover.

– Get a separate family floater for 5L–10L. Add top-up if needed.

– Have emergency fund of 6 months' expenses in FD or liquid fund.

– This ensures you don’t withdraw from mutual funds during emergencies.

– Your children’s future and your wealth target need this protection shield.

– Without it, a single crisis can derail the plan.

? Tax Planning for Efficient Returns

– You can claim Rs 1.5 lakh under 80C. Your PF, VPF will cover most of it.

– No need to add low-yield insurance for tax saving.

– Avoid traditional plans. They give poor returns and long lock-ins.

– Invest in ELSS mutual fund if 80C gap remains.

– ELSS gives tax benefit and long-term equity returns.

– Use 80D for health insurance. Rs 25,000 for self and family. Rs 50,000 if parents covered.

– Check if SIPs qualify for capital gains tax.

– Equity mutual funds now attract 12.5% tax on LTCG above Rs 1.25 lakh.

– Short-term capital gains are taxed at 20%.

– Use a certified financial planner to manage redemptions smartly to reduce tax impact.

? Milestones for the Next 10 Years

– Year 1–3: Increase SIPs. Build strong corpus base.

– Year 4–6: Stay invested. Don’t stop even during market corrections.

– Year 7–9: Review goals. Switch from small-cap to balanced funds if nearing target.

– Year 10: Gradually shift goal-based amount from equity to debt to secure final value.

– Don’t wait for last year. Start reducing risk in 8th or 9th year.

– Keep emergency fund untouched.

– Don’t redeem mutual funds for short-term needs.

– Keep mutual fund folios mapped to each goal to avoid confusion.

? Finally

– You are doing many things right already.

– You have goal clarity, consistent investing and discipline.

– Just fine-tune the strategy with yearly reviews and SIP boosts.

– Avoid index funds. Stick to active mutual funds for better returns.

– Avoid direct plans. Use regular plans via certified financial planner for better results.

– Stay invested, stay focused. 3.5 Cr in 10 years is possible.

– A few steps done right each year can create lasting wealth.

– Build protection through insurance, keep emotions in control, and review yearly.

– Celebrate progress, not only results.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment