Hello Sir , below is my current MF investment per month. As of now total fund accumulated is 9.5 lacs.I want to accumulate 2.5cr over the next 15 years and planning to invest another 15-20k per month. Please suggest. SBI Focused Equity Fund Direct...

Ans: Your commitment to increasing monthly investments by 15–20% yearly is excellent.
It shows strong financial planning discipline.
Your current mutual fund (MF) strategy reflects good intent to grow wealth over time.
Now, let us examine your portfolio carefully from a 360-degree perspective.

» Current Mutual Fund Portfolio Overview
– You are investing Rs 14,900 monthly across five funds.
– You focus on diversified, mid-cap, small-cap, contra, and power & infrastructure funds.
– Current XIRR is 12.80%, which is decent.
– Your total value is Rs 3 lakh.
– You also contribute Rs 1,500 monthly to PPF.
– PPF is a good safe investment for tax-saving and long-term stability.
– Continuously increasing PPF contribution is a smart plan.

» Mid-cap and Small-cap Fund Analysis
– Mid-cap and small-cap funds offer higher return potential.
– But they come with higher risk and volatility.
– HDFC Small Cap and Motilal Midcap are long-term growth-focused.
– However, you rightly observed SBI Contra and HDFC Small Cap underperformance.
– Markets fluctuate, but long-term performance matters.
– Avoid hasty exits due to short-term underperformance.
– But active monitoring is essential.

» SBI Contra and HDFC Small Cap Underperformance
– SBI Contra has been sluggish recently.
– Small-cap funds also faced downturn due to market corrections.
– Actively managed mutual funds help adapt to changing market conditions.
– Direct funds require deep market knowledge and are harder to manage alone.
– Regular funds through MFD offer professional portfolio balancing.
– Certified Financial Planner helps maintain proper asset allocation.

» Recommendation to Replace or Add New Funds
– Replace SBI Contra with a well-performing diversified equity fund.
– Look for large & mid-cap funds with stable track records.
– Adding a balanced or hybrid fund reduces overall volatility.
– Hybrid funds invest in both equity and debt.
– This provides steady returns and lowers risk.
– Adding a high-quality large-cap focused equity fund is wise.
– Large-cap funds are less volatile and provide stable growth.

» Suggested Fund Categories to Add
– Large & Mid-cap Fund:

Provides stability with good growth.

Less risky than small or mid-cap only.
– Hybrid Conservative Fund:

Mixes debt and equity.

Helps manage volatility during market downturns.

Useful for emergency liquidity and moderate growth.

» Avoid Index Funds or ETFs
– Index funds passively follow market indices.
– They do not actively manage risk.
– They mirror market ups and downs directly.
– In volatile markets, index funds may fall sharply.
– Active mutual funds adapt portfolios to market changes.
– Active funds can shift sectors based on opportunity.
– Professional fund managers monitor and adjust investments.
– For a young investor, actively managed funds are better.

» Incremental Monthly Investment Strategy
– You aim to step up investment by 15–20% annually.
– This is good to keep pace with inflation.
– Small increases compound over long periods.
– Set a fixed increment every year.
– For example, Rs 14,900 becomes Rs 17,135 next year.
– This ensures systematic wealth accumulation.

» Power & Infrastructure Fund Position
– Infrastructure funds are sector-specific.
– Good for long-term growth when economic growth picks up.
– But very volatile in short term.
– Continue quarterly investment, not monthly, to balance exposure.
– Maintain it as a small portion of the total corpus.
– Do not overweight sector funds in your portfolio.

» Importance of Asset Allocation
– At your age, equity-heavy allocation is fine.
– But diversification is essential to reduce risk.
– Allocate around 70–80% in equity, 20–30% in debt and hybrid funds.
– PPF provides safe, tax-free returns.
– A good cushion against market volatility.

» Avoid LIC, ULIP, Investment Cum Insurance Policies
– If you hold any LIC or ULIP policies, consider surrendering them.
– These policies offer poor returns with high charges.
– They are often marketed as dual-purpose products.
– Better to invest in mutual funds for wealth creation.
– Insurance should be term insurance for life cover only.

» Emergency Fund Must Be Separate
– Always maintain an emergency fund of 6–12 months of expenses.
– Keep it in liquid assets like fixed deposits or liquid mutual funds.
– Do not dip into PPF or equity mutual funds during emergencies.

» Systematic Investment Plan (SIP) Growth Mindset
– Continue disciplined SIP investing every month.
– Increase your SIP amount annually as planned.
– Inflation rises every year by around 6%.
– Increasing SIP keeps your investment power intact.
– Even small increments add up due to compounding.

» Taxation Implications
– Equity mutual fund LTCG above Rs 1.25 lakh is taxed at 12.5%.
– Short-term gains are taxed at 20%.
– Debt mutual fund gains follow income tax slab.
– Regular monitoring of capital gains helps in efficient planning.
– Systematic Withdrawal Plan (SWP) helps manage tax during retirement.

» Retirement Corpus Consideration
– At 26, focus should be on wealth creation.
– Maintain aggressive equity exposure for next 20–30 years.
– Your goal is Rs 5–10 crore corpus by age 55.
– Systematic increases, disciplined investing, and proper allocation help.
– Avoid last-minute portfolio shifts based on market news.

» Role of Certified Financial Planner
– A CFP provides objective, professional guidance.
– Helps avoid emotional decisions during market ups and downs.
– Monitors portfolio yearly and recommends rebalancing.
– Keeps track of changing goals and risk appetite.

» Avoid Direct Fund Investing Alone
– Investing directly in mutual funds means no expert advice.
– You may not know when to switch or adjust allocations.
– Regular fund investment via MFD provides professional management.
– CFP credential ensures informed decision-making.
– This avoids common investor mistakes like panic selling or wrong timing.

» Periodic Review Importance
– Review your portfolio every year.
– Check fund performances against benchmarks.
– Rebalance allocation if required.
– Avoid adding too many funds.
– Keep 6–8 quality funds in the portfolio.
– Too many funds dilute focus and returns.

» Psychological Preparedness
– Markets will rise and fall over time.
– Don’t panic in downturns.
– Stay invested with discipline.
– Emotional decisions lead to loss.
– Systematic and patient investing pays in long term.

» Final Insights
– Your current investment habits are commendable.
– Adding a large-cap and hybrid conservative fund is advisable.
– Reduce exposure to underperforming SBI Contra and HDFC Small Cap.
– Maintain PPF and increase it yearly.
– Continue power & infra fund as a small exposure.
– Avoid index funds or direct investments alone.
– Maintain a separate emergency fund.
– Increase SIP systematically each year.
– Certified Financial Planner will guide proper allocation and rebalancing.
– You are on a good path for wealth creation and financial freedom.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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