Should a 39-year-old woman earning Rs. 1.5 lakh/month reconsider her existing mutual fund mix of Rs.7,500?

Ans: You have a well-structured investment portfolio. You're contributing to various financial instruments like NPS, PPF, LIC, Sukanya Samriddhi, and mutual funds. Your commitment towards saving Rs 17,000 monthly via SIPs shows a long-term vision.

Let’s review your mutual fund portfolio to check if it’s aligned with your long-term goals.

Mutual Fund Portfolio Evaluation
Your mutual fund portfolio includes:

Gold Fund
Axis Gold Fund: Rs 1,000

Balanced Advantage Fund
ABSL Balanced Advantage Fund: Rs 1,000

Debt Fund
ABSL Dynamic Bond Fund: Rs 1,500

ELSS (Equity-Linked Savings Scheme)
Parag Parikh Tax Saver Fund: Rs 1,500
Kotak Tax Saver Fund: Rs 1,500

Large Cap Fund
HDFC Index Fund Nifty 50: Rs 2,000
Canara Robeco Blue Chip Equity Fund: Rs 1,000
JM Financial Mutual Fund: Rs 2,000
Axis Blue Chip Fund: Rs 3,000

Mid Cap Fund
Nippon India Growth Fund: Rs 1,500

Small Cap Fund
Tata Small Cap Fund: Rs 1,000

Analysis of Your Portfolio
Balanced Advantage and Debt Allocation

Your investment in ABSL Balanced Advantage Fund and ABSL Dynamic Bond Fund ensures some stability.
These are good options for reducing volatility but you may want to increase your allocation to debt as you age.
Equity Exposure

Your portfolio is largely tilted towards equity, which is good for long-term wealth accumulation.
You’ve diversified across large-cap, mid-cap, and small-cap funds, providing a balanced risk-reward ratio.
ELSS Funds

Your investment in Parag Parikh and Kotak Tax Saver Funds helps you save taxes under Section 80C.
These funds also generate equity-linked growth for long-term wealth.
Gold Fund

The allocation of Rs 1,000 to Axis Gold Fund is fine but don’t over-allocate. Gold doesn’t offer high returns like equities but acts as a hedge.
Suggested Adjustments and Recommendations
1. Large Cap Fund Duplication
You have several large-cap funds in your portfolio (HDFC Index Fund, Canara Robeco Blue Chip, Axis Blue Chip, and JM Financial Mutual Fund). Large-cap funds tend to perform similarly.
Consider trimming the number of large-cap funds. You could consolidate by choosing one or two top-performing funds.
2. Debt Allocation
You have Rs 1,500 in ABSL Dynamic Bond Fund. To maintain a balanced portfolio, gradually increase your debt allocation over time. This will provide stability as you approach retirement.
Debt funds are less volatile and provide predictable returns.
3. SIP Top-Up Plan
Currently, you don’t plan to top-up your SIPs. However, a 5%-10% annual increment in your SIPs can significantly enhance your wealth accumulation.
A top-up plan helps you stay ahead of inflation and boosts compounding.
4. Tax Efficiency
You’re already investing in ELSS funds, which are tax-efficient.
However, ensure that your overall equity capital gains are monitored. Any long-term capital gains (LTCG) exceeding Rs 1.25 lakh in a financial year are taxed at 12.5%. Short-term capital gains (STCG) are taxed at 20%.
Be mindful of this while redeeming your funds in the future.
5. Gold Fund
Continue with a small allocation to gold. It provides diversification, but avoid increasing this allocation. Historically, gold offers moderate returns compared to equities.
Long-Term Retirement Planning
NPS Contribution
Your NPS investment of Rs 6,000 monthly is beneficial for retirement planning. NPS offers an additional Rs 50,000 tax benefit under Section 80CCD(1B).
Continue this, but consider increasing the contribution as you approach retirement for a steady post-retirement income.

Debt and Fixed-Income Investments
As you get closer to retirement, shift more towards debt instruments. Consider increasing PPF contributions or adding to other low-risk instruments. Your PPF, LIC, and Sukanya Samriddhi contributions ensure tax-free, risk-free returns.

Final Insights
Your portfolio is well-diversified across various asset classes, providing a good balance of risk and stability. However, simplifying your large-cap exposure, increasing debt allocation gradually, and considering a SIP top-up plan will enhance your long-term financial security.

Continue monitoring and rebalancing your portfolio as you move closer to retirement. Your current strategy has the potential to generate significant returns if maintained and slightly adjusted for optimal performance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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