Should I Change My Mutual Funds? A 50-Year-Old Investor Seeks Expert Advice

Ans: Hello Ashwani, I can see over diversification with your current investments with 12k sip amount. I would suggest you to consolidate your mf investments and reshuffle the portfolio.

Ans: Funds are good, please continue, don’t increase funds; if you need to top up, do in the existing schemes.

Ans: Your portfolio is a mix of different category of mutual funds like large-cap, mid-cap, small-cap, and thematic funds which indicates you have well diversified your portfolio. Diversification can help reduce risk and improve the potential for returns.

Investment for long term in equity funds gives good return. We suggest you to stay invested for 5-10 years and you can expect 12-14% CAGR from your portfolio while in the short term you may see volatility as expected of equity investments.

However it is essential to keep reviewing your portfolio periodically and track the performance of particular mutual funds and make adjustments if required.

Ans: You have built a strong base. Your savings discipline is rare. Your asset mix also shows good balance. Your retirement goal is clear. Your questions are valid and important. I will review your plan from every angle.

– You save a high amount every month.
– You have good mix of equity and debt.
– You have covered insurance well.
– You plan ahead for kids and retirement.
– This mindset builds wealth and peace.

» Review of Current Monthly Investments
Your monthly SIP commitment is high and steady. This is a strong advantage for long term wealth.

You invest in flexi cap, multi cap, sector funds, and smart mid and small cap funds. This brings wide equity mix. This mix spreads risk and captures market growth.

Your ETF use shows your interest in passive products. But passive products have drawbacks for Indian investors.

Your NPS amount is also stable. NPS gives long term discipline. It also gives tax benefits.

You also run STPs from liquid funds. This smoothens market timing risk. This is a good step.

» Evaluation of Your Current Scheme Choices
Your overall fund types are right. But you must reduce product clutter in the long run. Many funds create overlap.

Your flexi cap, multi cap, mid cap and small cap mix is good. These are core growth categories. These categories use active fund manager skill. This skill matters in India. Market inefficiency is higher in India. Active funds help more in this market.

Your sector allocation is small. Sector funds carry high risk. Keep exposure small as you are doing.

Your debt use through liquid funds is sensible.

Your ETF use needs attention. Passive products follow an index. Index funds and ETFs copy a basket of stocks. They cannot choose better stocks. They also cannot avoid poor stocks. This limits return. This also increases risk during market falls.

Index funds and ETFs also collect huge money. When markets crash, they fall with the index. They cannot defend. Active funds try to adjust. They try to protect capital better.

ETFs also need demat and market orders. They depend on market liquidity. Low liquidity may widen the gap between NAV and traded price.

Because of these reasons, actively managed funds remain better for long term Indian investors. They give flexibility. They use research. They identify value early. They avoid weak stocks quickly.

» Direct Funds vs Regular Funds
You may hold some direct funds. Direct funds look cheaper on the surface. But they have a hidden disadvantage.

Direct funds give zero guidance. Zero portfolio review. Zero risk alignment. Zero future planning. For a high-value portfolio like yours, this risk is dangerous.

You handle career, family, kids’ future and your retirement. You cannot track every fund, every risk change and every asset shift daily. This can reduce your long term returns.

Regular funds, when invested through a distributor with CFP qualification, give full guidance. They help you stay on track. They adjust your plan. They manage risk. They support your asset mix. They help you avoid wrong decisions during market stress. This service value is bigger than the small cost difference.

A high value portfolio needs professional eyes. A wrong step during a market fall can undo years of work. Regular funds with guidance protect you from this risk.

» Review of Your Risk Spread
Your current mix has flexi cap, multi cap, mid cap and small cap. This shows healthy risk spread.

Your debt portion through liquid and PF is stable. PF gives guaranteed accumulation. It also reduces volatility.
Your NPS allocation also strengthens retirement discipline.

Your direct stocks add some concentration risk. But your total allocation is balanced now.

» Review of Existing Insurance
Your term cover is fine.
Your medical cover is useful.
You can keep a super top-up once income grows.

» Review of Current Assets
MF equity and debt = Rs 1.75 Cr
PF = Rs 1.20 Cr
NPS = Rs 33 L
FD = Rs 8 L
Direct stocks = Rs 1.33 Cr

Your total financial assets are strong. They already give comfort for future goals.
Your expenses are Rs 1.2 L per month now. This is important for future calculations.

» Suitability of Your Present Funds
Your overall allocation category wise is good.
Only two adjustments needed:
– Reduce passive ETF allocation slowly.
– Keep sector exposure small.

Your other funds are fine. They follow broad market. They use active management. They support long term growth.

» Expected Wealth in 10 Years with Same SIP
I will not show formulas. I will give simple insight.

You invest more than Rs 2.5 Lakhs per month. This is a large monthly flow. Over ten years, this flow alone becomes a big amount. Equity will grow it more.

With this pace, your wealth in ten years will be far higher. Your existing Rs 1.75 Cr in MF will also grow. Your PF will grow too. Your stocks may also rise.

You can expect a very sizable long term accumulation if you maintain this pace.

» Expected Wealth if SIP Increases 10% Every Year
A rising SIP builds wealth much faster.
A step-up of 10% per year increases future value deeply.
It helps you fight inflation.
It also aligns with rising income.

If you step up yearly, your ten year wealth will grow significantly more than constant SIP.
The combination of compounding and rising investment creates a powerful effect.

» Kids’ Education Goal
You plan Rs 50 L per daughter.
This is a solid target.
You have ten years and fifteen years left.
Your current investments can cover both goals.
Your long-term SIPs will support these targets.

Keep these goals separate in planning.
Use a stable mix for these goals.
Avoid high sector exposure for kids’ goals.

» Review of Retirement Plan
Your retirement is ten years away.
Your present expense is Rs 1.2 L per month.
After ten years, expenses will rise.
Inflation will increase cost.
Your retirement corpus must cover long years.

You have strong base assets already.
You also add heavy monthly SIP.
Your PF and NPS will aid you later.

You need a large retirement fund because you will live long.
You will need stable income.
Your equity portion will support long life.

» Retirement Corpus Target
You need a large figure for comfortable retirement.
You need to cover living cost, health cost, lifestyle cost.
You also need to keep extra safety buffer.

You already have more than Rs 4 Cr across equity, debt, PF, NPS and stocks.
With ten more years of heavy saving and growth, you will reach a comfortable retirement figure.
You must maintain discipline.
You must keep allocation correct.

Your total future corpus can meet your retirement needs if you continue your plan.
You will have enough to maintain current lifestyle.
Your kids’ goals can also be met.

» Portfolio Streamlining Suggestions
– Keep active funds as core.
– Reduce number of funds slowly.
– Exit passive ETFs slowly.
– Keep sector fund exposure limited.
– Keep mid and small cap allocation moderate.
– Maintain some liquid for safety.
– Keep PF untouched until retirement.
– Continue NPS for long term discipline.

» Asset Allocation Guidance
As you near retirement, shift slowly.
Reduce high volatility categories.
Add stable funds.
Keep equity for growth.
Keep debt for stability.
This balance will support steady income later.

» Behaviour Guidance for Next Ten Years
– Stay invested in all market cycles.
– Do not react to market noise.
– Do not stop SIPs during falls.
– Review allocation yearly.
– Avoid unnecessary fund changes.
– Keep tax impact in mind.
– Keep cash flow stable.

» Tax Notes
New tax rule says equity LTCG after Rs 1.25 L yearly is taxed at 12.5%.
STCG is taxed at 20%.
Debt fund gains are taxed at your slab.
Plan redemptions smartly before retirement.

» Guidance on Future Strategy
– Continue current SIPs.
– Step up yearly as you can.
– Streamline funds with clear purpose.
– Follow active management.
– Avoid direct funds without guidance.
– Review yearly with a Certified Financial Planner.
– Keep strict discipline in investments.
– Maintain strong emergency buffer.

» Mistakes to Avoid
– Avoid direct funds without guidance.
– Avoid high ETF exposure.
– Avoid too many small funds.
– Avoid panic selling.
– Avoid sudden changes without review.

» Your Ten-Year Roadmap
– Continue current SIPs.
– Step up 10% yearly.
– Reduce passive products.
– Keep active products as your core.
– Maintain equity-debt balance.
– Secure kids’ education targets.
– Strengthen retirement assets.
– Keep clear focus.

» What You Can Expect Emotionally
You will see market ups and downs.
You will doubt your plan during falls.
Stay firm.
Your discipline will win long term.
Your family will gain peace and stability.

» Final Insights
Your current plan is strong.
Your discipline is strong.
Your income supports your goal.
Your savings habits support growth.
Only small fixes are needed.
Your retirement target is reachable.
Your kids’ goals are also reachable.
Stay consistent for ten more years.
Your efforts today will create life-long comfort.

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

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