Hope you are doing well in this covid times. 

I have started SIPs in following MFs:

1)Parag Parikh flexi cap -regular growth- 10000

2)Nippon india Pharma fund direct growth- 5000

3)Axis bluechip fund direct growth- 20000

4)UTI flexi cap fund direct growth- 10000

5)Nippon india large cap fund direct growth- 8000

Total 53000

I am 35 years old. I am planning to do SIP of total 1 lakh. Can you advise whether above investment is okay and what more mutual funds should I invest in to make it 1 lakh total.

Ans: 1, 2, 3, 4 are fine, and for further investment below funds can be considered

1. Axis ESG Equity Fund – Growth
2. Motilal Focused 25 Fund – Growth
3. ICICI Pru US Bluechip Equity Fund – Growth
4. DSP Quant Fund - Growth

Ans: Considering your existing portfolio, allocate the remaining 2k in a large cap or balanced equity fund for stability. Review your current funds: keep those aligned with your risk tolerance and long-term goals. Consider discontinuing funds with overlapping objectives. Regularly monitor performance and consult a financial advisor for personalized guidance.

Ans: It's fantastic to see your proactive approach to investing at such a young age. Let's delve into your portfolio and see how you're doing:

• Starting a SIP at 27 is a commendable step towards building wealth for your future. Remember, it's never too late to begin investing, and your consistency will be key to your success.

• Your choice of mutual funds reflects a diversified approach, covering different sectors and market capitalizations. This is a smart strategy as it spreads your risk across various segments of the market.

• Investing in small-cap, flexi-cap, equity opportunities, ELSS tax saver, and dividend yield funds provides you with exposure to different investment styles and strategies. However, it's essential to review these funds periodically to ensure they continue to align with your financial goals.

• Consider assessing the performance of each fund against its benchmark and peers to gauge whether they are meeting your expectations. Look for consistency in returns and fund management expertise.

• As you progress in your investment journey and your financial situation evolves, you may consider increasing your SIP amount gradually. This will accelerate the growth of your portfolio over time.

• Additionally, stay updated with market trends and changes in economic conditions to make informed decisions about your investments. Keeping yourself informed will help you navigate any market volatility effectively.

• If you're unsure about whether your chosen funds are the right fit for you, don't hesitate to seek advice from a Certified Financial Planner. They can provide personalized recommendations based on your financial goals, risk tolerance, and investment horizon.

In conclusion, you're off to a great start with your SIP investments. Stay disciplined, continue to educate yourself about investing, and periodically review your portfolio to ensure it remains aligned with your objectives. With patience and perseverance, you're on track to build a strong financial foundation for the future. Keep up the excellent work!

Ans: Your decision to start SIPs is a positive step towards building wealth in a disciplined manner. Systematic Investment Plans are the best way to invest for long-term goals because they minimize market timing risks and benefit from the power of compounding. Now, let's assess the mutual funds you've chosen.

1. Selection of Mutual Funds
You’ve invested in a good mix of large-cap, mid-cap, and small-cap funds. This diversification will help balance risks and returns, as different market segments perform differently over time. However, let’s analyse each category for a better understanding.

2. Large Cap Fund: Focus on Stability
Large Cap Funds: You have selected a large-cap index fund, which provides exposure to stable and financially strong companies. While large-cap funds are less volatile, index funds are passively managed. It means they mimic the benchmark index, which offers average returns in line with the market.

Limitations of Index Funds: Although index funds offer low expense ratios, actively managed large-cap funds can provide better returns. An experienced fund manager can outperform the index by selecting high-potential stocks. You might miss out on such opportunities with an index fund.

3. Mid Cap Fund: Balanced Growth Potential
Mid-Cap Fund: Your choice of a mid-cap fund is a good addition for growth. Mid-cap funds invest in companies with strong growth potential, though they can be volatile in the short term. Over the long term, mid-cap funds often outperform large caps but may carry higher risks.

Recommendation: Keep investing in this category for 10-20 years, as mid-caps will provide significant growth over time if held patiently.

4. Small Cap Funds: Higher Returns with Higher Risks
Small-Cap Funds: You’ve invested in two small-cap funds, which could provide the highest returns but also come with higher volatility. Small-cap funds invest in companies that are still in their growth phase, and therefore their performance can fluctuate significantly.

Diversification Risk: Having two small-cap funds might expose your portfolio to excessive risk. Instead of having multiple funds in the same category, you can consider reducing small-cap exposure and adding a balanced or multi-cap fund for better risk management.

5. Your Portfolio Diversification
Diversified Portfolio: Your portfolio has a good mix of large, mid, and small-cap funds. However, it leans more towards small-cap funds, which could increase risk over time. If you're investing for a period of 10-20 years, having a combination of large-cap (for stability), mid-cap (for growth), and a small allocation to small-cap funds will work well.

Suggestions for Optimizing Your SIP Investments
Increase Large-Cap Allocation: While your large-cap investment is in an index fund, you might want to switch to an actively managed large-cap fund. This could provide better risk-adjusted returns in the long term.

Balanced Approach: Instead of having two small-cap funds, consider reducing your exposure to small-caps. You can add a balanced or hybrid fund to bring more stability. A diversified equity fund could also serve you well.

Gradual Step-Up: As you continue investing over the years, it's important to increase your SIP contributions annually. A 10% increase in your SIP every year can help you achieve your financial goals much faster.

Final Insights
Mutual Funds for Long-Term: Your investment horizon of 10-20 years is ideal for SIPs in equity mutual funds. Equity markets perform well over the long term and SIPs help average out the cost of investment.

Rebalancing Every 2-3 Years: Keep an eye on your portfolio and review it every 2-3 years. Make sure your portfolio stays aligned with your risk tolerance and financial goals. Rebalancing can help you lock in profits from certain funds and reinvest in others.

Active vs. Passive: While your index fund choice gives market-average returns, you might benefit more from actively managed large-cap funds in the long run.

Small Cap Exposure: Reduce your exposure to small-cap funds, as they carry more risk. Having one small-cap fund is usually sufficient for the average investor. Consider adding a balanced or multi-cap fund for more stability.

Continued Discipline: Investing for 10-20 years requires patience. SIPs take time to deliver their full potential, especially in volatile markets. Stay disciplined, and avoid pausing or stopping your SIPs based on market fluctuations.

By following these steps and making small tweaks, you can create a more balanced and growth-oriented portfolio. Keep a long-term perspective and regularly increase your investments to reach your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment