Hi i am looking at building a corpus of 10 cr in the next 10 to 12 years... My current portfolios value is 72 lacs.. and my monthly sip value is around 70k ..which will increase by 10 % YOY.. I am investing in 1) SBI small cap fund 2) mirae asset emerging bluechip 3) axis midcap 4) canara robeco emerging 5) ICICI pru nifty 50 6) parag Parikh flexi 7) quant large and midcap 8) SBI focussed equity 9) SBI equity hybrid 10) quant absolute fund Please let.me.know are the funds fine and what changes are required to reach the intended target...of 10 cr.

Ans: Hello Metesh. Overall your portfolio report sounds very promising. I must say that you have conducted thorough research on the market. The sbi focused equity scheme may need to be reconsidered in comparison to peer schemes. Furthermore, in addition to achieve a corpus of 10 crores in the coming years, I would suggest you increase your sip and include an annual add-on to your current sip amount. In view of the fact that 65k sip will not suffice to accomplish your goals.

Ans: To build a corpus of 1 crore in 12-15 years, consider the following suggestions:

Evaluate your current SIP portfolio: Review the performance and overlap of your existing funds. Ensure that you have a well-diversified portfolio across different market segments and investment styles.

Optimize your SIPs: Assess the frequency and amount of your SIPs to ensure they align with your investment goals and risk tolerance. Consider consolidating SIPs into fewer funds to reduce complexity and transaction costs.

Increase SIP contributions: If possible, consider increasing your SIP contributions over time to accelerate wealth accumulation. Regularly review your budget and financial situation to determine if you can afford to increase your investment amounts.

Explore additional investment avenues: Consider diversifying your portfolio by adding other asset classes such as debt funds, real estate, or alternative investments based on your risk appetite and investment horizon.

Monitor and adjust: Periodically review your investment portfolio and make adjustments as needed based on changes in market conditions, financial goals, and personal circumstances. Stay disciplined with your investment strategy and avoid making emotional decisions during market fluctuations.

Consulting with a financial advisor can provide personalized guidance and help you develop a comprehensive investment plan tailored to your specific needs and objectives. They can also assist you in implementing strategies to achieve your target corpus of 1 crore within the desired time frame.

Ans: Evaluating Your Current SIP Investments
Your current investment strategy includes a mix of large-cap, mid-cap, and small-cap funds. This diversified approach is commendable.

Parag Parikh Flexi Cap Fund: Flexi cap funds are versatile. They invest across market capitalisations, offering good potential for growth.

UTI Nifty 50 Fund: This is an index fund. It tracks the Nifty 50 index, providing stable returns. However, it lacks flexibility compared to actively managed funds.

Quant Mid Cap Fund: Mid-cap funds offer higher growth potential. They are suitable for long-term wealth creation.

Quant Small Cap Fund: Small-cap funds can deliver significant returns. They are riskier but beneficial for long-term goals.

Mirae Asset Large and Mid Cap Fund: This fund balances stability and growth. It invests in both large and mid-cap stocks.

Suggestions for Diversification
Your portfolio already has a good mix. Here are some suggestions for further diversification:

Balanced Allocation: Ensure a balanced allocation across different market caps. Avoid over-concentration in any single category.

Sectoral Funds: Consider adding sectoral funds. They invest in specific sectors, offering diversification across industries.

Aggressive Hybrid Funds: These funds provide a mix of equity and debt. They balance risk and reward.

Benefits of Actively Managed Funds
Flexibility: Actively managed funds adapt to market changes. They can outperform passive index funds.

Strategic Management: Fund managers make informed decisions. They aim to maximise returns while managing risks.

Disadvantages of Index Funds:

No Flexibility: Index funds cannot adapt to market conditions. They simply replicate the index.

Limited Potential: They often provide average returns. They do not outperform the market.

Direct Funds vs. Regular Funds
Disadvantages of Direct Funds:

Lack of Guidance: Direct funds do not offer professional advice. You might miss strategic insights.
Benefits of Regular Funds:

Professional Advice: Investing through a Certified Financial Planner (CFP) ensures expert guidance.

Comprehensive Service: Regular funds provide portfolio management and financial planning.

Estimating Your Corpus in 10 Years
Based on your current SIPs, let's estimate your potential corpus in 10 years:

Parag Parikh Flexi Cap Fund: Rs. 10,000 per month

UTI Nifty 50 Fund: Rs. 3,000 per month

Quant Mid Cap Fund: Rs. 4,000 per month

Quant Small Cap Fund: Rs. 2,500 per month

Mirae Asset Large and Mid Cap Fund: Rs. 4,000 per month

Assuming an average annual return of 12-15%, your investments could grow significantly. However, this is an estimate. Actual returns may vary based on market conditions.

Additional Investment Options
Balanced Advantage Funds: These funds dynamically adjust their allocation between equity and debt. They manage risk effectively.

International Funds: Consider international funds for global exposure. They diversify your portfolio beyond domestic markets.

Final Insights
Your current SIP strategy is well-diversified and aligned with long-term wealth creation. Consider adding sectoral and balanced advantage funds for further diversification. Actively managed funds provide flexibility and strategic management. Avoid over-reliance on index funds. Review your portfolio regularly and seek professional guidance for optimal results.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

Ans: It’s great to see that you are already investing consistently and have a target in mind. Your aim of generating Rs 2 crore by 2034 from mutual fund investments is achievable with a systematic approach. Let's break down your current investment strategy and assess whether any adjustments are needed to meet your goal.

Review of Your Existing SIPs and Lump Sum Investments
You are currently investing Rs 70,000 per month through SIPs and have made some lump-sum investments as well. Let's evaluate the funds you have chosen based on their category, diversification, and potential for long-term growth.

Global Innovation Fund: This fund gives you exposure to international markets, which helps diversify your portfolio. Keep an eye on global market trends, but this fund can add value if the global tech and innovation sectors grow.

Flexi Cap and Mid Cap Funds: Flexi Cap and Mid Cap funds offer a balance of growth potential and risk. They tend to outperform in the long run, but they also come with volatility. These funds are good to hold for a long-term horizon.

Lump Sum Investments in Sector-Specific Funds (Energy and Manufacturing): Sector-specific funds can be high-risk but may offer high returns if the sector performs well. The energy sector has potential but may be volatile due to factors like government policies, oil prices, and global energy trends. Manufacturing is more stable but less likely to deliver aggressive returns. Keep these funds for diversification, but be cautious.

Small Cap Funds: You have exposure to two small cap funds. While small cap funds can offer high returns, they come with high volatility. Keep in mind that small cap funds should ideally not exceed 20% of your portfolio due to their risk profile.

Large Cap and Blue Chip Funds: Large Cap funds are a safer bet in the long term and provide stability. They might not offer the highest returns but will protect your capital. Continue your SIPs in these funds.

Focused Equity Funds: These funds invest in a limited number of stocks, which can give concentrated returns but also carry higher risk. As you are looking for a long-term goal, these funds can add value, but balance them with more diversified funds.

Index Funds: While index funds are low-cost, they track the index and may not offer outperformance. Actively managed funds can give you better returns over the long term. If you are invested in index funds, consider reviewing their performance and reallocating to actively managed funds with a Certified Financial Planner.

Is Your Portfolio Diversified Enough?
Your portfolio has a good mix of different fund categories—small cap, mid cap, flexi cap, and large cap. You also have exposure to international markets and sectoral funds. However, be cautious about over-investing in small caps and sectoral funds due to their high volatility. Consider reducing the allocation to sectoral funds if their performance dips.

Will You Achieve Rs 2 Crore by 2034?
You aim to accumulate Rs 2 crore by 2034. Based on your current SIP amount, it is important to assess if this is enough. Considering an average return of 12% per annum from your mutual funds, Rs 70,000 per month SIPs may get you close to your target. However, it is wise to periodically review your portfolio and step up your SIP amount by 10-15% every year to stay on track.

Recommendation:

Increase your SIP amount: If possible, increase your SIPs by 10% every year to boost your corpus and mitigate the impact of inflation.
Step-Up SIPs: Some mutual funds offer a "Step-Up SIP" option where you can increase your monthly SIP amount automatically by a fixed percentage every year. This will help you stay on track for your Rs 2 crore goal.
Lump Sum vs SIPs
Lump sum investments can boost your corpus, but they depend on market timing. Since you already have a few lump-sum investments, it’s good to continue with SIPs to average out market volatility. If you come into additional funds, like a bonus or windfall, consider allocating some towards lump sum investments in diversified funds.

Expense Ratios and Fund Performance
It’s important to regularly monitor the expense ratios of the funds you are invested in. High expense ratios can eat into your returns over the long term. Actively managed funds with high expense ratios should justify the cost with higher returns. If you find that the returns are not justifying the high costs, consult a Certified Financial Planner to switch to better-performing funds with reasonable expenses.

Managing Risk and Rebalancing
Your current portfolio leans towards high-risk, high-return funds like small caps and sectoral funds. As you approach your target year, start reducing exposure to high-risk funds and shift more towards stable funds like large caps and flexi caps. This will help preserve your capital and reduce volatility.

Every year or two, review your portfolio and rebalance it. For example, if small caps have outperformed, they may now constitute a larger portion of your portfolio than you originally planned. Rebalance by selling some small cap units and buying more large cap or flexi cap units.

Emergency Fund and Insurance
Apart from investing in mutual funds, ensure that you have an emergency fund that covers 6-12 months of your expenses. This will protect you from dipping into your investments in case of unforeseen financial needs.

You already have a term insurance plan, which is great. Ensure that the sum assured is adequate to cover your family's financial needs in case of an emergency.

Tax Planning
Remember to account for taxation when planning your investment strategy. Long-term capital gains (LTCG) on equity mutual funds are taxed at 10% for gains above Rs 1 lakh. Plan your withdrawals strategically to minimize tax liabilities.

You can also invest in ELSS (Equity Linked Savings Scheme) funds to save on taxes under Section 80C. ELSS funds have a 3-year lock-in period and provide both tax benefits and market-linked returns.

Final Insights
Your current portfolio is well-diversified but high on risk.
Keep track of expense ratios and switch funds if necessary.
Step up your SIPs annually by 10-15% to meet your Rs 2 crore target.
Rebalance your portfolio every year to manage risk.
Maintain an emergency fund and ensure adequate insurance coverage.
Consider tax-saving strategies like ELSS to optimize your investments.
With a disciplined approach and periodic reviews, your goal of Rs 2 crore by 2034 is achievable.

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