Hi I am investing 65,000 monthly in MF and current portfolio value is 56,00,000. PF 44,000 monthly and current holding 45,00,000. Investing 11,000 NPS monthly and additional 50k in NPS annually. Home loan of 80lakhs. I want to build a corpus of 15cr by by the age of 50... current age is 41. Is it possible with current investment. Kindly suggest.

Ans: It would be advisable to use SIP or STP methods to accumulate corpus and let the power of compounding work.

A monthly investment of Rs 40,000 would be required for a corpus of Rs 5 crores in 20 years.

The funds that may be considered are as under:

• HDFC Index Fund - Sensex Plan - Regular Plan - Growth 
• Samco Flexi Cap Fund - Regular Plan - Growth 
• UTI MNC Fund - Growth Plan
• Parag Parikh Flexi Cap Fund- Regular Plan Growth
  
  
  

Ans: Current Financial Overview
Age: 36 years
Monthly Income: Rs 80,000
Monthly Expenses: Rs 50,000
Current Investments:
Parag Parikh Flexi Cap Fund (PPFCF): Rs 10,000 per month
ICICI PSU Fund: Rs 3,000 per month
Mirae Asset Flexi Cap Fund: Rs 2,000 per month
Recurring Deposit (RD): Rs 9,000 per month
Financial Goal
Goal: Build a corpus of Rs 3 Crores by the age of 45 (9 years from now)
Investment Review
Parag Parikh Flexi Cap Fund (PPFCF)

This fund is known for its good performance and diversification. Continue investing here.
ICICI PSU Fund

PSU funds are sector-specific and can be volatile. Consider reducing exposure to sector-specific funds.
Mirae Asset Flexi Cap Fund

This is another good diversified equity fund. Continue investing here.
Recurring Deposit (RD)

RDs are safe but offer lower returns. Consider redirecting this amount to higher return investments.
Suggested Investment Plan
To achieve your goal of Rs 3 Crores in 9 years, you need a focused and aggressive investment strategy. Here's a revised plan:

Increase Equity Exposure
Equity mutual funds offer higher returns over the long term. Allocate more towards diversified equity funds:

Parag Parikh Flexi Cap Fund: Increase to Rs 15,000 per month.
Mirae Asset Flexi Cap Fund: Increase to Rs 5,000 per month.
Multi Cap Fund: Start with Rs 5,000 per month.
Mid Cap Fund: Start with Rs 5,000 per month for higher growth potential.
Balanced Funds
Balanced funds or hybrid funds provide a mix of equity and debt, offering moderate returns with lower risk:

Balanced Advantage Fund: Start with Rs 5,000 per month.
Reduce Sector-Specific Exposure
ICICI PSU Fund: Reduce or stop investment in this fund. Redirect this amount to diversified or balanced funds.
Systematic Investment Plan (SIP)
SIP in Mutual Funds: Set up SIPs in the suggested funds to ensure disciplined investing.
Debt and Liquid Investments
Recurring Deposit (RD): Consider reducing RD contributions. Redirect Rs 4,000 from RD to equity funds. Keep Rs 5,000 in RD for safety and liquidity.
Emergency Fund
Maintain an emergency fund equivalent to 6 months of expenses (Rs 3 Lakhs) in a high-interest savings account or liquid fund.
Additional Investments
If possible, increase your total monthly investment to Rs 35,000. This will help you reach your goal faster.
Monitoring and Adjusting
Regular Review: Review your portfolio every 6 months. Make adjustments based on market conditions and fund performance.
Rebalancing: Rebalance your portfolio annually to maintain the desired asset allocation.
Tax Efficiency
Tax Planning: Use tax-efficient investment options to minimize tax liability. Consider ELSS funds for tax-saving under Section 80C.
Final Insights
Consistency is Key: Stay consistent with your investments. Avoid making changes based on short-term market movements.
Professional Guidance: Consult a Certified Financial Planner for personalized advice and to ensure your investment strategy aligns with your goals.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You have a diverse portfolio that includes mutual funds, direct equity, EPF, and fixed deposits. This is a good starting point. Your portfolio value currently stands at Rs. 34 lakh, including Rs. 5 lakh in mutual funds, Rs. 3 lakh in direct equity, Rs. 20 lakh in EPF, and Rs. 6 lakh in fixed deposits. You are also investing Rs. 14,000 monthly in your EPF and Rs. 35,000 through SIPs in mutual funds.

Your goal is to create a corpus of Rs. 2 crore in 10 years. This is an ambitious yet achievable goal with the right investment strategy. Let’s assess your portfolio and see if any adjustments are needed.

Assessing Your Mutual Fund Investments
You are investing Rs. 35,000 per month across seven different mutual funds. Your funds cover various segments, including large-cap, mid-cap, small-cap, flexi-cap, contra, and active funds. This diversified approach helps in managing risk while capturing growth across different market segments. However, there are a few points to consider:

Actively Managed Funds vs Index Funds: You’ve included an index fund in your portfolio. While index funds are popular, they lack the flexibility of actively managed funds. Actively managed funds have the potential to outperform index funds, especially in a volatile market. This could be particularly important given your conservative investment style. You might want to reconsider the allocation towards the index fund.

Mid and Small-Cap Exposure: You have significant exposure to mid-cap and small-cap funds. These funds can deliver high returns, but they also come with higher risk. Given your conservative investment approach, you might want to re-evaluate this exposure. It may be wiser to shift some allocation towards more stable large-cap or multi-cap funds.

Fund Overlap: Multiple funds in your portfolio might have overlapping stocks. This can reduce diversification benefits. Consider consolidating your portfolio to reduce overlap and streamline your investments.

Evaluating Your Direct Equity Investments
You have Rs. 3 lakh in direct equity. While direct equity can offer high returns, it also comes with high risk. As a conservative investor, you should evaluate whether your stock picks align with your risk tolerance. It might be beneficial to focus more on mutual funds managed by professionals, especially in a volatile market.

Importance of EPF in Your Portfolio
Your EPF stands at Rs. 20 lakh, with a monthly contribution of Rs. 14,000. EPF is a safe and tax-efficient investment, providing steady returns. It’s a critical part of your portfolio, especially given your conservative nature. It ensures a stable base, and the compounding effect will significantly contribute to your overall corpus in the long term.

Fixed Deposits: Safe but Limited Growth
You have Rs. 6 lakh in fixed deposits. While FDs are safe, their returns are low compared to inflation and other investment options. Given your 10-year horizon, you might want to reconsider this allocation. Shifting a portion of your FD investment into debt mutual funds or balanced funds could offer better returns without significantly increasing risk.

Evaluating Your SIP Strategy
You are currently investing Rs. 35,000 per month through SIPs in mutual funds. Over 10 years, this disciplined approach will compound significantly. However, let’s evaluate if this amount is enough to reach your Rs. 2 crore goal.

Increasing SIP Contributions: Given your current portfolio and investment rate, you might need to increase your SIP contributions to meet your target. Even a small increase in your monthly SIP can have a substantial impact over 10 years due to compounding.

Reallocating SIPs: As mentioned earlier, consider reallocating some of your SIPs from mid-cap and small-cap funds to more stable funds. This will align better with your conservative risk profile.

Additional Strategies for Wealth Creation
Beyond your current investments, there are other strategies you can consider to enhance your wealth creation:

Systematic Transfer Plan (STP): If you have a lump sum amount in your FD or savings account, consider using an STP to transfer this money into mutual funds gradually. This helps in averaging out the purchase price and reduces the risk of investing a large sum at one go.

Systematic Withdrawal Plan (SWP): As you approach your goal in 10 years, consider setting up an SWP to generate a regular income from your corpus while protecting your principal. This is particularly useful for post-retirement planning.

Debt Funds: Given your conservative nature, adding some debt funds to your portfolio might provide stability. Debt funds offer better returns than FDs with relatively low risk. They also provide liquidity, which is crucial for any emergency needs.

Monitoring and Reviewing Your Portfolio
Regularly reviewing your portfolio is critical to staying on track with your financial goals. Markets and personal situations change over time. Thus, it’s important to monitor your investments and make adjustments as needed.

Annual Review: Conduct an annual review of your portfolio. This will help you assess the performance of your funds and make necessary changes.

Rebalancing: If certain funds outperform, they may take up a larger portion of your portfolio than intended. Rebalancing ensures that your portfolio remains aligned with your risk profile and financial goals.

Tax Efficiency: Consider the tax implications of your investments. Long-term capital gains from equity funds are taxed at 10% beyond Rs. 1 lakh, while debt funds have different tax rules. Tax planning should be an integral part of your investment strategy.

Final Insights
Achieving a Rs. 2 crore corpus in 10 years is possible with disciplined investing and a strategic approach. Your current portfolio is well-diversified, but some adjustments can make it more aligned with your conservative nature. Consider increasing your SIP contributions, reallocating some funds, and exploring additional strategies like debt funds and STPs.

By staying disciplined and regularly reviewing your portfolio, you can stay on track towards your financial goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You have a clear goal: building a corpus of Rs. 2 crore in 10 years for retirement. Your current investments include a diversified mix of mutual funds, direct equity, EPF, and FDs. You are also consistently investing through SIPs, which is a disciplined approach.

Appreciation for Discipline
Your commitment to SIPs and consistent saving in EPF and FDs shows your disciplined approach to investing. This is a strong foundation for long-term wealth creation.

Analysing Your Current Portfolio
Let's break down your existing portfolio to understand its alignment with your goal.

Mutual Funds:
You are investing Rs. 35,000 monthly across seven funds, which is well-diversified across large-cap, mid-cap, small-cap, and flexi-cap categories. Diversification is key to balancing risk and returns. However, certain aspects could be optimised.

Direct Equity:
Your Rs. 3 lakh investment in direct equity can offer potential high returns, but it also carries higher risk compared to mutual funds. It’s important to ensure that you are comfortable with this risk and are monitoring your portfolio regularly.

EPF:
Your EPF balance of Rs. 20 lakh is a significant component of your retirement planning. The regular contribution of Rs. 14,000 per month will continue to grow your corpus steadily, offering safety and tax benefits.

FDs:
With Rs. 6 lakh in FDs, you have a safe but low-return component in your portfolio. While this ensures liquidity and security, FDs generally offer lower returns compared to other options.

Evaluating Your SIP Choices
Your mutual fund selection includes a mix of index funds, mid-cap, large-cap, small-cap, flexi-cap, and contra funds. Here’s a quick assessment:

1. UTI Nifty 50 (Rs. 5,000):
Index funds like UTI Nifty 50 track the index closely, offering low-cost exposure to the market. However, index funds have limitations in flexibility and cannot adapt to market changes. Actively managed funds can potentially outperform in the long run.

2. Motilal Oswal Midcap (Rs. 5,000):
Midcap funds are great for long-term growth, but they come with higher volatility. Given your conservative profile, ensure you are comfortable with the fluctuations.

3. Parag Parikh Flexi Cap (Rs. 5,000):
This is a well-diversified fund, which can adapt to market conditions by investing across market caps. It’s a good choice for a balanced approach.

4. Motilal Oswal Large and Midcap (Rs. 5,000):
Large and midcap funds offer a blend of stability and growth potential. This fund can provide good returns over the long term while balancing risk.

5. Axis Small Cap (Rs. 5,000):
Small cap funds have high growth potential but also come with significant risk. Consider your risk tolerance carefully before continuing with this allocation.

6. Quant Active (Rs. 5,000):
This actively managed fund offers flexibility to navigate different market conditions, which is beneficial in volatile markets.

7. SBI Contra (Rs. 5,000):
Contra funds invest in undervalued stocks, which may take time to perform. While this can provide good returns, it also requires patience.

Recommendations for Optimisation
Based on your profile as a conservative investor, there are some areas where you can optimise your portfolio for better alignment with your goals.

1. Rebalance Your Portfolio:
Given your conservative nature, consider reducing exposure to high-risk funds like small-cap and mid-cap. Instead, allocate more to large-cap and flexi-cap funds, which offer a better balance of risk and return.

2. Consider Actively Managed Funds:
Actively managed funds can outperform index funds by making strategic investments based on market conditions. Replacing your index fund with an actively managed large-cap fund could enhance returns while still aligning with your conservative risk profile.

3. Increase Your SIP Contribution:
To achieve your Rs. 2 crore target, increasing your SIP amount will be crucial. Consider increasing your monthly SIPs by Rs. 10,000-15,000. This can significantly boost your corpus over 10 years.

4. Utilise Your Lumpsum Investment Wisely:
Your plan to invest Rs. 1-1.5 lakh yearly in mutual funds is wise. Spread this investment across well-performing flexi-cap and large-cap funds. This will ensure you are taking advantage of market opportunities while staying within your risk tolerance.

5. Monitor and Review Regularly:
Regularly reviewing your portfolio is essential. Markets change, and so do fund performances. Make sure to reassess your investments annually with the help of a Certified Financial Planner to ensure you stay on track.

Projecting Your Corpus Growth
With your current SIPs and an additional increase, along with your yearly lumpsum investments, you have a strong chance of reaching your Rs. 2 crore target. However, this projection assumes a steady market growth rate. Be prepared for market fluctuations and adjust your investments as needed.

Final Insights
Your disciplined approach and diversified portfolio set a solid foundation for achieving your retirement goals. By optimising your investments and increasing your SIPs, you can confidently work towards your Rs. 2 crore corpus in the next 10 years. Regularly review your portfolio, stay informed, and make adjustments as needed to stay on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in