Kapil Padha: Kindly give your expert opinion regarding my monthly mutual fund investments of Rs. 28000 (all SIPs) I have been doing for the last 4 years. I am 39 yr old. I want to create a corpus of around 2 Crore in the next 15 years. Your expert opinion will be appreciated. 1. HDFC Children's Gift Fund - (Lock-in) - Regular Plan - Rs. 10000. 2. ICICI Prudential Midcap Fund - Growth - Rs. 5000 3. ICICI Prudential Multicap Fund - Growth - Rs. 2000 4. Axis Bluechip Fund - Regular Growth - Rs. 4500 5. Axis Focussed 25 Fund - Regular Growth - Rs. 2000 6. SBI Focussed Equity Fund - Regular Growth - Rs. 4500 Are the funds mentioned above good? Or do I have to change to some other funds?

Ans: Hello Kapil. As per your current portfolio & requirements, I suggest AMC & Category diversification, along with reshuffling your portfolio. It would be worth considering ICICI Pru Midcap Fund SIP in comparison to better schemes in the same category.

Your current monthly sip is sufficient for 2 CR Corpus without inflation adjustment. Your sip amount might need to be increased to 78k if you envision your corpus with inflation adjusted.

Ans: Rs. 28K in 15 years can create a corpus of Rs. 1.7 crs

Ans: Hello Kapil. To achieve 2 cr corpus in the next 15 years , your current sip contribution seems to be perfect. I would suggest to reconsider the Axis Focused 25 Fund and ICICI Midcap Fund with its peer schemes.

Ans: Your commitment to investing is commendable. With a strategic approach, we can assess your portfolio and determine the feasibility of achieving a Rs. 2 crore corpus in the next five years. Let’s delve into the analysis and provide recommendations.

Evaluating Your SIP Investments
Your current monthly SIP investment of Rs. 65,500 is diversified across various funds, which is a positive approach. Here’s a brief evaluation:

ICICI Blue Chip Fund (Rs. 12,000)
Blue-chip funds are stable and provide steady returns. They are less volatile and suitable for long-term investments.

Canara Robeco Blue Chip Fund (Rs. 20,000)
Another blue-chip fund, enhancing the stability of your portfolio. It’s good to have a significant allocation here.

Mirae Asset Large Cap (Rs. 2,000)
Large-cap funds are relatively safe and provide consistent returns.

Quant Active Fund (Rs. 10,000)
Actively managed funds can potentially outperform the market, but come with higher risk.

HDFC Flexi Cap (Rs. 5,000)
Flexi cap funds provide diversification across market caps, offering a balance of growth and stability.

PGIM Flexi Cap (Rs. 3,000)
Another flexi cap fund, adding to the diversified approach.

Canara Robeco Emerging Equities (Rs. 5,000)
Emerging equity funds target mid and small-cap stocks, providing higher growth potential but with increased risk.

Mirae Asset Emerging Blue Chip (Rs. 2,500)
This fund balances between large and mid-cap stocks, providing a mix of stability and growth.

Axis Growth Opportunities (Rs. 3,000)
Growth funds aim for higher returns through aggressive investment strategies, suitable for a balanced risk profile.

Kotak Small Cap (Rs. 3,000)
Small-cap funds can deliver high returns, but they also come with significant risk.

Evaluating Your Lump Sum Investments
Your lump sum investments also show a good mix of fund types. Here’s an assessment:

Canara Robeco Small Cap (Rs. 75,000)
Small-cap funds, while risky, can provide substantial returns over time.

HDFC Balanced Advantage (Rs. 3,90,000)
Balanced funds provide a mix of equity and debt, offering moderate risk with steady returns.

ICICI Equity & Debt Fund (Rs. 4,00,000)
This hybrid fund further balances your risk and return profile.

PGIM Balanced Advantage (Rs. 2,35,000)
Another balanced fund, enhancing stability in your portfolio.

PGIM Midcap Opportunities Fund (Rs. 1,90,000)
Mid-cap funds offer higher growth potential than large-cap but are riskier.

Parag Parikh Flexi Cap Fund (Rs. 1,50,000)
Flexi cap funds provide diversification and can adapt to market changes.

Quant Active Fund (Rs. 1,25,000)
Active funds aim for market outperformance but come with higher volatility.

SBI Flexi Cap Fund (Rs. 1,62,000)
Flexi cap funds add to the diversified nature of your portfolio.

UTI Flexi Cap Fund (Rs. 30,000)
Another flexi cap fund, maintaining diversification.

Assessing the Feasibility of a Rs. 2 Crore Corpus
Given your current investments, achieving a Rs. 2 crore corpus in five years is possible but challenging. It depends on market performance and consistent returns. Historically, equity mutual funds can offer 10-12% annual returns, but this is not guaranteed.

Recommendations for Continued Investment
Maintain Diversification
Your portfolio is well-diversified. Continue this strategy to manage risk effectively.

Increase Equity Exposure Cautiously
Consider slightly increasing your SIP amounts in high-growth funds like small-cap and mid-cap funds if you are comfortable with higher risk.

Review and Rebalance Annually
Regularly review your portfolio’s performance and rebalance annually to ensure it aligns with your goals.

Consider Systematic Withdrawal Plans (SWP)
As you approach your goal, consider shifting some investments to safer options and use SWPs to manage withdrawals systematically.

Stay Informed
Keep abreast of market trends and economic factors that might impact your investments.

Evaluating Specific Fund Choices
Blue Chip Funds
Blue-chip funds are a safe bet. Ensure that you have a substantial allocation here for stability.

Flexi Cap Funds
Flexi cap funds provide flexibility and diversification across market caps, which is beneficial.

Small and Mid-Cap Funds
These funds offer high growth potential but be mindful of their volatility. Balance their proportion to match your risk tolerance.

Balanced Advantage and Hybrid Funds
These funds are excellent for maintaining a balance between growth and safety. They should form a core part of your portfolio as you near your goal.

Aligning Investments with Financial Goals
Short-Term Goals
For any short-term financial needs, consider safer investment options like debt funds or fixed deposits.

Medium-Term Goals
Balanced funds or hybrid funds are suitable for medium-term goals, offering a balance of growth and stability.

Long-Term Goals
Continue with your equity investments for long-term goals. Equities typically provide higher returns over a long period.

Ensuring Tax Efficiency
Invest in funds that provide tax benefits under Section 80C to optimize your tax savings. Balanced funds and equity-linked savings schemes (ELSS) can be considered for this purpose.

Importance of Professional Guidance
Consulting a Certified Financial Planner can provide personalized advice. They can help you adjust your portfolio based on your financial situation and goals.

Conclusion
Your current investment strategy is robust and well-diversified. With careful planning and regular monitoring, achieving a Rs. 2 crore corpus in the next five years is within reach. Continue your disciplined investment approach and consider professional guidance for optimal results.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Investment Analysis and Portfolio Review
Your current investment strategy shows consistency and foresight. Investing in mutual funds, provident funds, and stocks indicates a balanced approach. However, to ensure you achieve your goal of a Rs. 2.5 crore corpus by retirement at 50, let's dive deeper into your portfolio and suggest some refinements.

Current Mutual Fund Portfolio
Nippon India Multi Cap Growth Fund: This fund offers diversified exposure across market capitalizations. Multi-cap funds can weather market volatility by adjusting their investment across large, mid, and small-cap stocks.

Nippon India Vision Growth Fund: This is a sectoral/thematic fund. While it offers growth potential, it also carries higher risk due to sector concentration.

ICICI Prudential Multi Asset Fund Growth: Multi-asset funds diversify across equity, debt, and other asset classes. Increasing your SIP amount annually is a good strategy for growth.

HDFC Defence Fund Direct Growth: A new addition focused on the defence sector. While thematic funds can yield high returns, they are also subject to higher risks.

Assessment and Recommendations
Your current portfolio mix indicates a balanced but slightly aggressive investment approach. Considering your retirement goal, here are some recommendations:

1. Maintain Diversification:
Ensure your portfolio remains diversified across different sectors and market capitalizations. This reduces risk and enhances return potential.

2. Review Sectoral Exposure:
Sectoral and thematic funds can be volatile. Limit your exposure to these funds to a small percentage of your overall portfolio.

3. Increase SIP Amounts:
To achieve a Rs. 2.5 crore corpus in 15 years, consider increasing your SIP contributions gradually. Compounding benefits will enhance your returns over time.

Suggested New Mutual Funds
Adding two new mutual funds can help further diversify your portfolio. Here are some options to consider:

1. Diversified Equity Fund:
A diversified equity fund invests across various sectors and market caps. It offers balanced growth with moderate risk.

2. Hybrid Fund:
Hybrid funds invest in both equity and debt instruments. They provide stability with the potential for equity-like returns.

Action Plan for Rs. 2.5 Crore Corpus
To achieve your target corpus, consider the following steps:

1. Review and Adjust Annually:
Regularly review your portfolio's performance. Adjust your investments based on market conditions and your financial goals.

2. Increase Investments Gradually:
Consider increasing your SIP amounts annually. This leverages the power of compounding and helps in accumulating wealth faster.

3. Stay Disciplined:
Maintain a disciplined investment approach. Avoid withdrawing investments prematurely and stay focused on your long-term goal.

4. Consult a Certified Financial Planner:
A certified financial planner can provide personalized advice and strategies. They help optimize your portfolio based on your risk profile and financial goals.

Additional Recommendations
1. Emergency Fund:
Ensure you have an emergency fund covering at least 6-12 months of expenses. This prevents premature withdrawal of your investments during emergencies.

2. Insurance Coverage:
Adequate life and health insurance coverage protects your investments. It ensures financial stability for your family in case of unforeseen events.

3. Regular Monitoring:
Keep track of your investment portfolio. Regular monitoring helps in making informed decisions and adjusting strategies as needed.

Conclusion
Your current investment strategy is commendable, showcasing consistency and a balanced approach. With a few adjustments and additional investments, you can achieve your retirement goal of Rs. 2.5 crore.

Stay disciplined, increase your SIP amounts gradually, and maintain diversification. Consulting a certified financial planner will provide personalized guidance and optimize your portfolio further.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in