Hello sir. Currently I am 35 years old. I have just started investing in mutual funds. (a) parag parekh flexi cap - 7500/- per month (B) tata small cap fund -2500/- per month (C) mirae asset ELLS tax saver -5000/- (D) pGIM india mid cap opp. Fund -5000/- (E) quant infrastructure fund-3500/- (F) quant small cap fund -4000/- (G) qyant active fund -3500/- (H) quant absolute fund-5000/- Total i am investing 36000/- per month. I want to get 2 crore till 2035. Additionally i want to invest 1 lakh per annum So my questions is AREA THESE MUTUAL FUNDS ARE OK or I should change any fund. And where should I invest this additional 1 lkh rupee per annum

Ans: Good afternoon,
You are doing good with your investments and we believe you can continue with them. For further investments, you can add a Midcap fund for Rs. 5,000: Kotak/Mirae/Nippon/SBI are good, if you are willing to take risk. Rest Rs. 5,000 can be divided between existing holdings: Flexicap and Sensex fund Rs. 2,500 each.

Ans: Hello Masroor & thanks for writing to me. All the funds you invest in are good funds, however I notice that you are investing in 2 thematic/sectoral funds, ICICI Prudential Technology Fund & ICICI Prudential Commodities Fund.

Thematic/sectoral funds are dependent on the market cycles and may not be suitable at all times for all investors. If you are confident about your understanding of the themes, you can continue investing in these funds. If you are not confident, then you can consider pausing SIP's in these schemes & instead invest in ICICI Prudential Mid cap fund & SBI Blue Chip Fund.

Ans: Investment Analysis and Portfolio Review
Your current investment strategy shows consistency and foresight. Investing in mutual funds, provident funds, and stocks indicates a balanced approach. However, to ensure you achieve your goal of a Rs. 2.5 crore corpus by retirement at 50, let's dive deeper into your portfolio and suggest some refinements.

Current Mutual Fund Portfolio
Nippon India Multi Cap Growth Fund: This fund offers diversified exposure across market capitalizations. Multi-cap funds can weather market volatility by adjusting their investment across large, mid, and small-cap stocks.

Nippon India Vision Growth Fund: This is a sectoral/thematic fund. While it offers growth potential, it also carries higher risk due to sector concentration.

ICICI Prudential Multi Asset Fund Growth: Multi-asset funds diversify across equity, debt, and other asset classes. Increasing your SIP amount annually is a good strategy for growth.

HDFC Defence Fund Direct Growth: A new addition focused on the defence sector. While thematic funds can yield high returns, they are also subject to higher risks.

Assessment and Recommendations
Your current portfolio mix indicates a balanced but slightly aggressive investment approach. Considering your retirement goal, here are some recommendations:

1. Maintain Diversification:
Ensure your portfolio remains diversified across different sectors and market capitalizations. This reduces risk and enhances return potential.

2. Review Sectoral Exposure:
Sectoral and thematic funds can be volatile. Limit your exposure to these funds to a small percentage of your overall portfolio.

3. Increase SIP Amounts:
To achieve a Rs. 2.5 crore corpus in 15 years, consider increasing your SIP contributions gradually. Compounding benefits will enhance your returns over time.

Suggested New Mutual Funds
Adding two new mutual funds can help further diversify your portfolio. Here are some options to consider:

1. Diversified Equity Fund:
A diversified equity fund invests across various sectors and market caps. It offers balanced growth with moderate risk.

2. Hybrid Fund:
Hybrid funds invest in both equity and debt instruments. They provide stability with the potential for equity-like returns.

Action Plan for Rs. 2.5 Crore Corpus
To achieve your target corpus, consider the following steps:

1. Review and Adjust Annually:
Regularly review your portfolio's performance. Adjust your investments based on market conditions and your financial goals.

2. Increase Investments Gradually:
Consider increasing your SIP amounts annually. This leverages the power of compounding and helps in accumulating wealth faster.

3. Stay Disciplined:
Maintain a disciplined investment approach. Avoid withdrawing investments prematurely and stay focused on your long-term goal.

4. Consult a Certified Financial Planner:
A certified financial planner can provide personalized advice and strategies. They help optimize your portfolio based on your risk profile and financial goals.

Additional Recommendations
1. Emergency Fund:
Ensure you have an emergency fund covering at least 6-12 months of expenses. This prevents premature withdrawal of your investments during emergencies.

2. Insurance Coverage:
Adequate life and health insurance coverage protects your investments. It ensures financial stability for your family in case of unforeseen events.

3. Regular Monitoring:
Keep track of your investment portfolio. Regular monitoring helps in making informed decisions and adjusting strategies as needed.

Conclusion
Your current investment strategy is commendable, showcasing consistency and a balanced approach. With a few adjustments and additional investments, you can achieve your retirement goal of Rs. 2.5 crore.

Stay disciplined, increase your SIP amounts gradually, and maintain diversification. Consulting a certified financial planner will provide personalized guidance and optimize your portfolio further.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Your commitment to investing Rs. 36,000 monthly at age 35 is admirable. The addition of Rs. 1 lakh annually indicates a strong focus on wealth creation. Let us analyse your portfolio and suggest improvements.

Portfolio Review
Flexi-Cap Fund (Rs. 7,500)
Flexi-cap funds provide the flexibility to invest across market capitalisations.
This flexibility ensures adaptability to changing market trends.
Retaining this allocation adds balance to your portfolio.
Small-Cap Funds (Rs. 2,500 and Rs. 4,000)
Small-cap funds are high-risk, high-reward investments.
Over a long horizon, they can deliver superior growth but may experience volatility.
Retain small-cap allocation but avoid excessive exposure to manage risks.
ELSS Tax Saver Fund (Rs. 5,000)
ELSS funds provide tax benefits under Section 80C with a 3-year lock-in.
They are a great tool for long-term wealth creation and tax planning.
Continue this SIP, as it aligns with your goals and tax-saving needs.
Mid-Cap Fund (Rs. 5,000)
Mid-cap funds strike a balance between growth and stability.
They are ideal for long-term investors with moderate risk tolerance.
Retain this allocation, as it complements your portfolio.
Infrastructure Fund (Rs. 3,500)
Infrastructure funds focus on the infrastructure sector.
These funds are concentrated and depend heavily on sectoral performance.
Consider reducing or reallocating this amount to more diversified funds.
Quant Small Cap and Active Funds (Rs. 3,500 each)
Having multiple funds in the same category can lead to overlap.
Consolidating funds can simplify management and improve portfolio efficiency.
Quant Absolute Fund (Rs. 5,000)
This fund's balanced approach offers exposure to equity and debt.
Retain this allocation, as it can provide stability during market corrections.
Suggestions for Portfolio Improvement
Simplify Your Portfolio
Holding too many funds increases overlap and complexity.
Retain one well-performing small-cap and multi-cap fund each.
Avoid over-diversification, which can dilute returns.
Focus on Core Categories
Stick to diversified categories like flexi-cap, mid-cap, and multi-cap funds.
These funds balance risk and reward effectively over the long term.
Reduce Sector-Specific Allocation
Infrastructure funds are risky due to their dependency on economic cycles.
Consider reallocating this amount to diversified equity funds.
Monitor Performance Annually
Review each fund’s performance over a 3-5 year period.
Replace consistently underperforming funds with better options.
Additional Rs. 1 Lakh Investment
Consider Balanced Approach
Divide Rs. 1 lakh between equity and debt for diversification.
Equity funds for growth and debt instruments for stability.
Allocate to Equity Funds
Invest in existing funds with proven long-term performance.
This will enhance the power of compounding in your portfolio.
Explore Debt Mutual Funds
Debt funds reduce portfolio volatility and offer predictable returns.
They are ideal for managing short-term goals or risk diversification.
Emergency Fund Allocation
Use part of this amount to build or enhance your emergency fund.
An emergency fund should cover 6–12 months of expenses.
Achieving Rs. 2 Crore Goal
SIP Continuation
Your Rs. 36,000 monthly SIP is aligned with your Rs. 2 crore target.
Consistency is key to achieving long-term goals.
Incremental Investments
Increase SIP amounts periodically with income growth.
This will help bridge any shortfall and accelerate corpus growth.
Avoid Frequent Changes
Stick to your strategy and avoid impulsive changes during market volatility.
A disciplined approach ensures better results over time.
Taxation Awareness
Gains above Rs. 1.25 lakh are taxed at 12.5%.
Plan withdrawals accordingly to minimise tax impact.
Final Insights
Your portfolio is well-structured but needs simplification to improve efficiency. Retain core funds, reduce sectoral exposure, and reallocate overlapping categories. Use the additional Rs. 1 lakh for equity and debt allocation to enhance diversification. Stay disciplined, monitor performance, and increase SIPs periodically to achieve your Rs. 2 crore goal by 2035.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: You are 38 years old and investing in mutual funds for the first time.

Your investment horizon is at least 15 years, which is good for wealth creation.

You plan to invest Rs. 35,000 per month through SIP.

You also want to invest Rs. 20-25 lakhs as a lump sum through Systematic Transfer Plan (STP).

Your risk profile is moderate, meaning you want a balance of growth and stability.

Reviewing Your Current Fund Selection
1. Gold Fund (Rs. 3,000 per month)
Gold is not a long-term wealth creator like equity.

It offers hedging against inflation, but returns are not consistent.

A small allocation is fine, but 10% of your SIP is too high.

Reduce to Rs. 1,500 per month and use the extra Rs. 1,500 in equity.

2. Balanced Advantage Fund (Rs. 5,000 per month)
These funds dynamically shift between equity and debt.

They reduce volatility but may not maximise returns over 15 years.

Keeping it is fine, but Rs. 3,000 per month is enough.

3. Equity & Debt Hybrid Fund (Rs. 5,000 per month)
This fund offers stability with some equity growth.

Good for a moderate risk profile.

Rs. 3,000 per month is sufficient.

4. Flexi Cap Funds (Rs. 10,000 per month in two funds)
Flexi-cap funds invest across large, mid, and small caps.

They offer diversification and strong long-term returns.

Keeping two funds is fine, but they should be different in strategy.

Rs. 10,000 allocation is good, but ensure they don’t overlap too much.

5. Midcap Funds (Rs. 6,000 per month in two funds)
Midcap funds can deliver high growth but are volatile.

Investing Rs. 6,000 per month (17% of SIP) is reasonable.

If you want less risk, reduce midcap allocation to Rs. 4,000.

6. IT Index Fund (Rs. 4,000 per month)
Index funds are not ideal, as they don’t outperform actively managed funds.

IT sector is cyclical and has periods of underperformance.

If you want sector exposure, use an actively managed technology fund instead.

Avoid this fund and redirect Rs. 4,000 to flexi-cap or large-cap funds.

7. International Fund (Rs. 2,000 per month)
Exposure to global markets is good for diversification.

The Nasdaq 100 is tech-heavy, which makes it risky.

If you want international exposure, choose a diversified global fund instead.

Keep Rs. 2,000 allocation but switch to a fund with wider global exposure.

Suggested SIP Allocation After Changes
Gold Fund: Reduce from Rs. 3,000 to Rs. 1,500 per month. Gold is not a long-term wealth creator.

Balanced Advantage Fund: Reduce from Rs. 5,000 to Rs. 3,000 per month. These funds are good for stability but may not maximise returns.

Hybrid Equity & Debt Fund: Reduce from Rs. 5,000 to Rs. 3,000 per month. This allocation is enough for stability.

Flexi Cap Funds: Keep the Rs. 10,000 per month allocation. These funds provide good diversification and long-term growth.

Midcap Funds: Reduce from Rs. 6,000 to Rs. 4,000 per month. Midcap funds are volatile. A moderate risk profile requires a slightly lower allocation.

IT Index Fund: Remove the Rs. 4,000 per month allocation. Index funds don’t outperform actively managed funds, and IT sector performance is cyclical.

International Fund: Retain Rs. 2,000 per month, but choose a fund with broader global exposure instead of a tech-heavy index.

Large Cap Fund (New Addition): Add Rs. 5,500 per month to a well-managed large-cap fund for stability and consistent growth.

How to Invest Rs. 20-25 Lakhs as STP
Invest the lump sum in a liquid or ultra-short-term fund to avoid market timing risks.

Transfer through Systematic Transfer Plan (STP) over 12-18 months to reduce volatility impact.

Allocate 60% to flexi-cap and large-cap funds for stability and growth.

Allocate 30% to midcap and hybrid funds for balanced growth.

Allocate 10% to international and gold funds for diversification.

Final Insights
Your SIP plan is well-structured, but minor changes will improve risk-return balance.

Removing the IT index fund and reducing midcap exposure will lower volatility.

Increasing large-cap allocation will bring stability without compromising returns.

Investing the lump sum through STP over 12-18 months will reduce risk.

Choosing actively managed funds over index funds will provide better returns.

This approach ensures long-term wealth creation with controlled risk.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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