Hello, I'm 35 years old. I'm planning to start a new cycle of SIPs and aspiration is to create a corpus of 1.5 crores in next 10 years. Monthly SIP is 50,000. Below are my mutual funds chosen: Quant midcap fund: 10,000, ICICI Prudential Bluechip Fund: 10,000, Quant Flexi Cap Fund: 10,000, SBI Small Cap Fund: 2,000, SBI PSU Fund: 8,000. Please suggest: - if the above chosen mutual funds are appropriate for this wealth generation, however, if no, please suggest alternatives and also advise if the amount chosen is apportioned is realistic. - if this SIP amount is adequate enough to generate the desired corpus? All are direct growth plans. Should I include Parag Parekh Flexi Cap Fund as well? Regards, Puneet

Ans: Monthly SIP of Rs. 40000 is adequate to build a corpus of Rs. 1 crs in 10 years.

Please continue with existing Tata, Mirae, Axis and can consider UTI Equity Fund -  Growth, Axis Bluechip Fund – Growth and DSP Mid Cap Fund – Growth

Ans: Puneet,

Your aspiration to create a corpus of Rs 1.5 crores in 10 years is commendable. Let's evaluate your current mutual fund choices and the allocation.

Current Allocation

Quant Midcap Fund: Rs 10,000

ICICI Prudential Bluechip Fund: Rs 10,000

Quant Flexi Cap Fund: Rs 10,000

SBI Small Cap Fund: Rs 2,000

SBI PSU Fund: Rs 8,000

Evaluation of Funds

Diversification: You have chosen a mix of large-cap, mid-cap, flexi-cap, small-cap, and sector funds. This ensures a diversified portfolio.

Risk Management: The inclusion of large-cap and flexi-cap funds helps balance the higher risk from mid-cap, small-cap, and sector funds.

Growth Potential: Mid-cap, small-cap, and flexi-cap funds offer high growth potential, though they carry higher risk.

Actively Managed Funds vs. Index Funds

Actively Managed Funds: Provide better adaptability to market conditions. Managed by professionals aiming to outperform the market.

Index Funds: Track specific indices and cannot adapt to market changes. May underperform compared to actively managed funds.

Disadvantages of Direct Plans

Lack of Guidance: Direct plans require self-research and decision-making.

Higher Risk: Greater potential for mistakes without professional advice.

Time-Consuming: Requires continuous monitoring and adjustments.

Benefits of Regular Plans Through CFP

Expert Advice: Certified Financial Planners (CFPs) provide tailored advice.

Holistic Planning: CFPs consider your overall financial goals and situation.

Ongoing Support: Regular reviews and adjustments to your strategy.

Is Your SIP Amount Adequate?

To assess if Rs 50,000 monthly SIP is adequate:

Expected Returns: Assuming an average annual return of 12-15%, your target is achievable.

Consistency: Staying invested for the full 10 years is crucial for compounding to work.

Adding Parag Parekh Flexi Cap Fund

Flexi Cap Funds: They offer a balance between risk and return by investing across market caps.

Evaluation: Adding another flexi-cap fund can further diversify your portfolio.

Suggested Adjustments

Review Sector Fund Allocation: Consider reducing the sector fund allocation if you want a more balanced portfolio.

Increase in Large-Cap Allocation: You may increase large-cap allocation for more stability.

Final Insights

Puneet, your current fund choices show a good mix of diversification and growth potential. With disciplined investing and regular reviews, achieving your Rs 1.5 crore goal in 10 years is realistic. Consider consulting a Certified Financial Planner for tailored advice and ongoing support.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in