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42-year-old seeks advice on ₹50k aggressive mutual fund portfolio for wealth creation

Ramalingam Kalirajan |8328 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Shaks on Apr 15, 2025Hindi

Hello Sir, Over last few years I have created the below mutual fund portfolio on my own. My goal is to maximise returns for wealth creation and time horizon is 15 years. I am 42 now and can take a more aggressive approach for next 8-10 years. Post that I may want to preserve my wealth more. I am investing total of 43k which i can increase to 50k. Please have a look and suggest. 1. Invesco India contra fund - 9k 2. HDFC midcap fund - 9k 3. Kotak Flexi cap - 4k 4. Mirae Asset large cap (SIP Stopped due to poor performance) 5. SBI Focused equity - 6k 6. PPFAS Flexi cap - 10k 7. SBI Small Cap - 5k

Ans: You have done a great job so far. Taking charge of your finances with a clear long-term goal shows discipline and maturity.

You are 42 now and planning for a 15-year journey. That gives you a solid runway. The next 8–10 years are ideal for growth-focused investing. After that, wealth protection becomes the priority.

Let me do a full 360-degree assessment of your portfolio and give you specific insights.

Your Current Portfolio Snapshot
You have a mix of the following fund categories:

Contra fund

Midcap fund

Flexicap fund

Large cap (SIP stopped)

Focused equity fund

Flexicap fund (second one)

Small cap fund

This mix is mostly aggressive, which suits your growth objective well for the next decade.

Strengths in Your Portfolio
Good equity exposure: 100% of your SIPs are in equity. This is ideal for long-term wealth creation.

Diversification by category: You have exposure to midcap, small cap, flexicap, and contra. This creates growth potential with some balance.

Reasonable fund count: You hold 6–7 schemes. This is manageable and not over-diversified.

SIP discipline: SIP of Rs 43,000 monthly is a solid commitment. Increasing it to Rs 50,000 will compound well.

Clear time horizon: 15 years gives enough time to absorb market volatility.

High risk appetite in early phase: Your willingness to stay aggressive for the next 8–10 years is suitable.

Gaps and Risks in Your Portfolio
Overlap between funds
Midcap, small cap, focused, and flexicap funds may hold similar stocks. This can create redundancy.

Two flexicap funds
You are holding two flexicap funds. This may lead to duplication of large holdings.

Stopped SIP in large cap fund
You stopped a large cap fund due to poor performance. But judging funds by short-term returns is risky. Equity needs time.

No separate large cap anchor
Currently, there is no dedicated large cap fund. Flexicap funds are partly large cap but not fully reliable.

Overexposure to mid and small cap
14k out of 43k (almost 33%) is in mid and small caps. This is fine now, but needs pruning later.

No tax planning around equity
With new tax rules, exit strategy is important. Not planning it may lead to surprise taxation.

Suggested Portfolio Restructuring
Let us now work towards simplifying and optimising your portfolio. We will focus on:

Growth in first 8–10 years

Wealth protection post that

Balanced risk

Sector and stock diversification

Fund manager consistency

Tax efficiency

Here is the revised structure:

Ideal Portfolio Structure (for 50k SIP)
Let us group funds into 4 buckets. This helps with purpose-driven investing.

1. Flexicap Fund – Rs 12,000
Gives you all-cap exposure.

Works as your core portfolio.

Dynamic allocation across cap sizes.

Good for long-term consistency.

Why only one flexicap?
Two flexicap funds increase overlap. Retain only the better performer.

Action: Stop SIP in the second flexicap. Continue with only one high-quality flexicap fund.

2. Midcap Fund – Rs 10,000
Good for 8–10 years horizon.

Outperforms large caps in long term.

Needs patience during volatility.

Limit to one scheme.
Too much midcap increases risk. 20% allocation is enough.

Action: Continue SIP in one good midcap fund.

3. Small Cap Fund – Rs 5,000
High return potential.

But high risk and deep drawdowns.

Ideal to cap exposure at 10%.

Action: Continue SIP. Don’t increase allocation.

4. Contra or Focused Fund – Rs 8,000
Contra brings non-consensus picks.

Focused funds bring high conviction bets.

You can hold either one, not both.
Keep the one with better long-term track record.

Action: Choose one between contra and focused. Exit the other. Continue SIP in selected fund.

5. Large & Midcap or Multi-Cap Fund – Rs 10,000
Brings structure to the portfolio.

Multi-cap ensures fixed allocation to all three market caps.

Large & midcap has 35% in each, offers balance.

This will replace the stopped large cap fund.

Action: Add one fund from this category. It will add stability.

What You Should Avoid
Avoid index funds
Index funds give average returns. They blindly follow index. They don’t beat the market.

Actively managed funds have professional stock selection.

Fund managers adapt to market trends. This gives higher potential return.

Avoid direct mutual funds
Direct funds need DIY management. Most investors can't track portfolios properly.

Investing through regular plans via a MFD with CFP credential gives guided portfolio review.

You also get rebalancing advice and emotional handholding during market falls.

What You Can Improve From Here
Increase SIP gradually
Move from Rs 43k to Rs 50k as planned. Add Rs 7k to your core fund.

Review portfolio every year
Remove underperformers. Stick to funds with consistent returns and experienced fund managers.

Rebalance post 8–10 years
Slowly move some SIPs to hybrid or large cap funds. Reduce mid and small cap exposure after age 50.

Consider goal-wise investing
Assign funds to goals. One for retirement. One for child’s future. This makes tracking easier.

Final Insights
You have built a strong base already. That’s truly impressive. With small changes, your portfolio will become sharper.

Your equity exposure is rightly aggressive now. Stay with that approach for the next 8–10 years.

From age 50 onwards, gradually reduce volatility. That way, you protect the gains created in earlier years.

Make sure your exit strategy is tax-efficient. Under the new rules:

Equity LTCG above Rs 1.25 lakh is taxed at 12.5%

STCG is taxed at 20%

So, staggered redemptions make more sense later.

You don’t need annuities, real estate, or index funds in your journey. Equity mutual funds, when guided by a Certified Financial Planner, offer better long-term benefits.

Just stay disciplined. Keep SIPs running. Avoid panic exits. Review yearly. Stick to one scheme per category. That’s your best route to wealth creation.

You’re already doing great. Just refine the edges.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

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