Greetings of the day! With reference to your article below, 

Read this article https://www.rediff.com/getahead/report/omkeshwar-singh-help-me-build-a-mf-portfolio/20221103.htm 

Would you please advice on my mutual fund portfolio for any additions or changes or switches? 

Here are my goals: 

Car: 20 lakh down 5-6 years

Child one education: 50 lakh

Child two education: 50 lakh

Health reserves: 50 lakh

Retirement: 10 crore 

My monthly salary is 1.8 lakh. I pay pf 1.2 lakh per year, NPS tier1 70k per year, LIC policies: 1.3 lakh per year. 

Advice on portfolio please. 

DSP TAX SAVER FUND-GROWTH: 1500 sip

MIRAE ASSET EMERGING BLUECHIP FUND-REGULAR PLAN-GROWTH OPTION:2000 sip

HDFC HYBRID EQUITY FUND REGULAR PLAN GROWTH :2000 sip

TATA DIGITAL INDIA FUND REGULAR PLAN GROWTH:2500 sip

ICICI PRUDENTIAL COMMODITIES FUND GROWTH: 2500 sip

UTI MID CAP FUND-GROWTH PLAN:3000 Sip

EDELWEISS RECENTLY LISTED IPO FUND-REGULAR PLAN-GROWTH: 2500

UTI FLEXI CAP FUND-REGULAR PLAN-GROWTH:1500 sip

Ans: Given your diversified portfolio and goals, maintain your current investments and gradually increase your emergency fund. Ensure your Motilal Oswal Microcap Fund addition complements existing holdings. Aim for a balanced approach, reviewing progress regularly to stay on track. Seek professional advice for personalized guidance. Predicted returns depend on market conditions and fund performance. Adjust contributions as needed.

Ramalingam, MBA, CFP
Chief Financial Planner

Ans: Given your goal of building a retirement corpus of 2 crores in 10 years and your current portfolio, here are some suggestions:

Increase SIP Contributions: Consider increasing your SIP amounts in high-performing funds like Parag Parikh Flexi Cap and PGIM India Midcap Opportunities Fund, which have shown good potential for long-term growth.

Review and Consolidate: Evaluate the performance of all your funds and consider consolidating your portfolio to fewer, well-performing funds to simplify management and potentially enhance returns.

Focus on Quality: Prioritize funds with strong track records, consistent performance, and experienced fund management teams. Consider adding large-cap and diversified equity funds for stability and balanced growth.

Asset Allocation: Ensure a balanced asset allocation across equity, debt, and gold funds based on your risk tolerance and investment horizon. Reallocate surplus funds strategically to maintain a diversified portfolio.

Regular Review: Monitor your portfolio regularly and make adjustments as needed based on changes in market conditions, fund performance, and your financial goals.

Consider consulting with a financial advisor for personalized advice tailored to your specific circumstances and goals.

Ans: Your financial plan is well-structured, and your investment discipline is strong. You have a clear retirement goal and an aggressive investment approach. However, there are areas where you can optimize your portfolio for better returns and lower risk.

Let’s analyze your portfolio from a 360-degree perspective.

1. Strengths of Your Current Portfolio
Your investment approach is well-planned. Here’s what you are doing right:

Disciplined SIP investment – You have a regular SIP plan in equity mutual funds.

Diversified portfolio – You have exposure to large-cap, mid-cap, small-cap, flexi-cap, and hybrid funds.

Strong traditional investments – EPF and NPS provide stability in retirement.

Emergency fund planning – Your recurring deposit ensures liquidity for unexpected expenses.

Increasing SIPs – Scaling up SIPs from Rs 18,000 to Rs 60,000 will help wealth creation.

Your financial discipline will help you reach your Rs 5 crore target.

2. Issues in Your Mutual Fund Portfolio
While your portfolio is diversified, some adjustments can improve performance.

Over-Diversification
You have too many funds across categories.

Too many funds dilute returns and make tracking difficult.

Having 4-5 well-chosen funds is better than 7-8 average funds.

Index Fund Exposure
One of your funds is an index fund.

Index funds cannot beat the market, while actively managed funds can.

A Certified Financial Planner (CFP) helps select the best actively managed funds.

Hybrid Funds and Overlapping Categories
You hold two hybrid funds, which can limit aggressive growth.

These funds are not necessary when you have EPF and NPS.

Adjusting these issues will enhance your returns.

3. Optimizing Your Mutual Fund Portfolio
Here’s how you can make your portfolio more efficient:

Reduce the Number of Funds
Keep 4-5 funds for focused wealth creation.

Large-cap, flexi-cap, mid-cap, and small-cap funds provide balanced exposure.

Avoid hybrid funds as EPF and NPS already offer stability.

Exit Index Fund
Actively managed funds provide better long-term returns.

Fund managers adjust portfolios based on market conditions.

An index fund will not protect during market corrections.

Adjust Your Portfolio Allocation
Large-cap fund – 30% allocation for stability.

Flexi-cap fund – 30% allocation for fund manager flexibility.

Mid-cap fund – 20% allocation for higher growth potential.

Small-cap fund – 20% allocation for aggressive wealth creation.

This will balance risk and return effectively.

4. Optimizing Traditional Investments
Your traditional investments are strong, but they can be more efficient.

EPF Contribution
EPF is a safe investment with tax benefits.

However, it provides lower returns compared to equity.

Consider redirecting a small portion towards equity SIPs for higher growth.

NPS Contribution
NPS is a good tax-saving tool but has withdrawal restrictions.

You can keep investing but ensure a higher allocation in equity within NPS.

Recurring Deposit for Emergency Fund
RDs are good for liquidity but offer low returns.

Instead, keep emergency funds in a liquid mutual fund for better returns.

A balanced approach between safety and growth is necessary.

5. Increasing SIPs from Rs 18,000 to Rs 60,000
Your plan to increase SIPs is excellent. However, proper allocation is required.

Large-cap fund – Increase SIP from Rs 4,000 to Rs 15,000.

Flexi-cap fund – Increase SIP from Rs 4,000 to Rs 15,000.

Mid-cap fund – Increase SIP from Rs 2,000 to Rs 10,000.

Small-cap fund – Increase SIP from Rs 4,000 to Rs 10,000.

Liquid fund – Allocate Rs 10,000 for short-term needs.

This ensures strong wealth creation while maintaining liquidity.

6. Expected Growth and Retirement Planning
With disciplined investing, you can achieve your Rs 5 crore goal.

Equity SIPs – Higher allocation ensures compounding benefits.

Traditional investments – EPF and NPS provide stability.

Emergency fund – Ensures liquidity for unexpected needs.

Your current path is excellent. Minor adjustments will enhance your wealth creation journey.

Finally
You are on the right track towards financial freedom. Your disciplined investment approach is commendable. However, some refinements will optimize your returns.

Reduce over-diversification and exit underperforming funds.

Replace index funds with actively managed funds for better returns.

Allocate SIPs strategically for better risk-reward balance.

Re-evaluate traditional investments to maximize efficiency.

Ensure liquidity through a liquid fund instead of an RD.

With these adjustments, you can achieve your Rs 5 crore target confidently.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment