I am investing in the below funds monthly Sip

Axis long term equity fund - 5000

Axis bluechip fund - 5000

Parag parikh flexi cap -3000

Mirae asset emerging bluechip -2000

Other than Sips:

PF - 7000

NPS - 50000 per year

Sukanya Samridhi yojana – 120,000 per year

My salary is 110,000 pm. Please suggest should I invest more if yes please suggest MF.

Ans: All are good. Numbers 3 /4/5 are very similar tho. you can merge them into only 2 such bluechip funds. always have direct plans only

Ans: The provided information is not sufficient to comment on any kind of investment being made, however it would be good if you make systematic investment in a disciplined manner every month. We would not be able to give you any suggestion on choice of fund to continue as it can be given only if we are aware about your targets, goals and ability to face volatility in the markets. However prima facie the funds selected are of good fundamentals and sustainable too continue. ABSL money manager is suggested to continue only if you are accumulating the fund to fund out some near term requirement or contingency.

We will suggest you to increase your investment by fixed percentage by every year to fund well for your goals.

We highly recommend consulting a certified financial advisor who can provide personalized advice based on your risk tolerance, financial goals, and specific circumstances.

Ans: At 37 years old, you are married with a 5-year-old child and earn around Rs. 70,000 per month. Your current investments include:

PPF: Rs. 30 lakh
EPF: Rs. 40 lakh
FD: Rs. 6 lakh
LIC premiums: Rs. 24,000 and Rs. 29,000 annually
Postal life insurance: Rs. 36,000 annually
Mutual funds: Various lump sum investments and SIPs
Evaluating Your Current Investments
Public Provident Fund (PPF):

You have Rs. 30 lakh in PPF, which provides stable and tax-free returns. This is a good foundation for your long-term financial goals.

Employee Provident Fund (EPF):

With Rs. 40 lakh in EPF, you have another solid, low-risk investment for retirement.

Fixed Deposit (FD):

Your Rs. 6 lakh in FDs offers safety but lower returns compared to other investments.

Life Insurance Policies:

Your LIC and postal life insurance policies provide life cover but might not be the most efficient investment vehicles in terms of returns.

Mutual Funds:

You have diversified mutual fund investments, including lump sums and SIPs. These funds can potentially offer higher returns over the long term.

Financial Goals
Your goal is to accumulate Rs. 50 lakh in the next 7-8 years. Let's analyze how to optimize your investments to achieve this target.

Strategic Investment Plan
Reviewing Life Insurance Policies:

Life insurance is crucial, but high premiums can limit investment potential. Consider term insurance for adequate life cover at lower costs. You can then redirect savings into high-return investments like mutual funds.

Mutual Fund Investments:

Mutual funds are a powerful tool for wealth creation. Your current SIPs are well-diversified across different fund categories. To reach Rs. 50 lakh, let's focus on optimizing these investments.

Optimizing SIPs
Current SIPs:

SBI Bluechip Fund: Rs. 1,000
SBI Contra Fund: Rs. 2,000
Kotak Small Cap Fund: Rs. 2,500
Parag Parikh Flexi Cap Fund: Rs. 2,500
Nippon Small Cap Fund: Rs. 2,500
Axis Quant Fund: Rs. 2,500
Suggested Adjustments:

Increase your SIP amounts in funds with strong performance histories and potential for high returns. Consider the following:

SBI Bluechip Fund: Increase to Rs. 3,000
SBI Contra Fund: Maintain Rs. 2,000
Kotak Small Cap Fund: Increase to Rs. 5,000
Parag Parikh Flexi Cap Fund: Increase to Rs. 5,000
Nippon Small Cap Fund: Maintain Rs. 2,500
Axis Quant Fund: Maintain Rs. 2,500
Lump Sum Investments
Existing Lump Sums:

ICICI Prudential Small Cap: Rs. 50,000
Axis Bluechip Fund: Rs. 70,000
SBI Balance Advantage Fund: Rs. 50,000
SBI Bluechip Fund: Rs. 3.69 lakh (now Rs. 5 lakh)
These lump sums have been performing well. Continue holding them for potential growth.

Future Lump Sum Investments:

Redirect your FD amount into mutual funds. FDs offer lower returns, and shifting this amount can boost your investment growth. Consider splitting Rs. 6 lakh into these funds:

Large Cap Fund: Rs. 2 lakh
Mid Cap Fund: Rs. 2 lakh
Small Cap Fund: Rs. 2 lakh
Investing the Savings from Insurance Premiums
LIC and Postal Life Insurance:

If you choose to surrender or reduce these policies, you can redirect the premium amounts into SIPs or mutual funds. For example:

Rs. 24,000 (LIC) + Rs. 29,000 (LIC) + Rs. 36,000 (Postal) = Rs. 89,000 annually
This amount can be added to your SIPs for higher returns.

Calculating the Future Value
Using a conservative return rate of 12% per annum for mutual funds, let's estimate the future value of your investments.

PPF and EPF:

Continue to grow steadily. Let's assume no additional contributions.

Mutual Funds:

With increased SIPs and redirected lump sums, your portfolio can grow significantly. For example:

Monthly SIPs: Rs. 20,000
Lump Sums: Rs. 6 lakh (initial) + growth
Over 7-8 years, these investments can potentially exceed Rs. 50 lakh, considering compounding returns.

Contingency and Emergency Funds
Maintain an emergency fund equivalent to 6 months of expenses. This ensures financial security in case of unexpected events.

Regular Review and Adjustment
Regularly review your investment portfolio. Adjust your SIPs and investments based on performance and market conditions. Annual rebalancing can help maintain your desired asset allocation.

Conclusion
By optimizing your current investments and increasing your SIP contributions, you can achieve your goal of Rs. 50 lakh in 7-8 years. Here’s a summary of the action plan:

Review and potentially surrender LIC policies.
Increase SIP contributions in high-performing funds.
Redirect FD amounts into mutual funds.
Maintain an emergency fund.
Regularly review and adjust your investments.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Financial Overview and Current Investments

You have a solid financial foundation with multiple investments. Your earnings are Rs 70,000 per month, and you have substantial savings and investments.

You have Rs 30 lakhs in PPF, Rs 40 lakhs in EPF, and Rs 6 lakhs in fixed deposits.

Your insurance premiums include Rs 24,000 and Rs 29,000 for LIC and Rs 36,000 for Postal Life Insurance.

You have invested Rs 50,000 in ICICI Prudential Small Cap, Rs 70,000 in Axis Bluechip Fund, and Rs 50,000 in SBI Balance Advantage Fund.

Your investment in SBI Bluechip Fund from 2014 has grown from Rs 3.69 lakhs to Rs 5 lakhs.

Your current SIPs are:

Rs 1,000 in SBI Bluechip Fund (running for 1.5 years)
Rs 2,000 in SBI Contra Fund (freshly added)
Rs 2,500 in Kotak Small Cap Fund (running for 2 years)
Rs 2,500 in Parag Parikh Flexi Cap Fund (running for 2 years)
Rs 2,500 in Nippon Small Cap Fund (freshly added)
Rs 2,500 in Axis Quant Fund (freshly added)
Evaluating Insurance vs. SIP Investments

Your LIC policies require a significant annual premium. Considering your goal of achieving Rs 50 lakhs in 7-8 years, it might be more efficient to reallocate these funds.

Insurance policies often offer lower returns compared to mutual funds. Thus, shifting your premiums to SIPs could potentially yield higher returns.

Advantages of SIPs in Mutual Funds

SIPs provide disciplined investing and benefit from rupee cost averaging. They also offer higher potential returns compared to traditional insurance policies.

You are already investing in a diverse range of funds, which is commendable. Diversification reduces risk and increases potential returns.

Assessing Your Current Mutual Fund Portfolio

Your mutual fund investments are well-diversified across large-cap, small-cap, and flexi-cap funds. This diversification balances risk and growth potential.

However, consider reviewing the performance of your funds periodically. Some funds may underperform, and it is wise to switch to better-performing ones if needed.

Achieving Your Goal of Rs 50 Lakhs

To achieve Rs 50 lakhs in 7-8 years, you need to focus on high-growth investments. SIPs in well-performing mutual funds are a great choice.

Based on historical performance, equity mutual funds have delivered substantial returns over the long term. Continue your SIPs and consider increasing the investment amount if possible.

Reallocating Your Investments

Consider stopping your LIC premiums and reallocating these funds to your SIPs. This reallocation can enhance your returns significantly.

For example, if you reallocate the Rs 53,000 (Rs 24,000 + Rs 29,000) annual premium to your SIPs, it could result in higher returns over time.

Reviewing Your Financial Plan Regularly

Regularly review and adjust your financial plan. The market conditions and fund performances change, and your plan should adapt accordingly.

A Certified Financial Planner can help you with these reviews and adjustments, ensuring your investments align with your goals.

Benefits of Actively Managed Funds

Actively managed funds can outperform the market, unlike index funds which merely track the market. These funds have the potential for higher returns due to expert management.

Your current mutual funds are actively managed, which is beneficial for achieving higher growth.

Disadvantages of Index Funds

Index funds only replicate the market index and lack the potential to outperform it. They are passive and do not adapt to market changes actively.

In contrast, actively managed funds are monitored by fund managers who can make strategic decisions to optimize returns.

Importance of Regular Fund Investments

Regular funds, invested through a mutual fund distributor with a CFP credential, offer professional guidance and expertise. This ensures your investments are well-managed and aligned with your financial goals.

Direct funds, although cheaper, lack professional guidance, which can impact the effectiveness of your investment strategy.

Conclusion

You have a strong financial base and a well-diversified investment portfolio. To achieve your goal of Rs 50 lakhs in 7-8 years, focus on reallocating your LIC premiums to SIPs.

Continue investing in your SIPs, review their performance regularly, and make adjustments as needed. Actively managed funds offer higher potential returns compared to index funds.

For optimal results, consider seeking advice from a Certified Financial Planner who can provide professional guidance and ensure your investments align with your goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in