Is mutual fund doubling the amount within 3.5 years tenure?

Ans: You have shown great maturity and discipline in your financial journey. At 61, being a minimalist and still investing consistently in mutual funds shows strong financial awareness and control. Doubling your equity investment is an excellent outcome. Most investors struggle to stay invested for long, but your patience has clearly paid off.

Now your question about whether to book profits or let the investments continue is very important. At this stage of life, reshuffling your portfolio is about balancing growth with stability. Let’s analyse this carefully from a Certified Financial Planner’s perspective.

» Understanding Your Current Position

You have achieved 100% growth, which means your investments have doubled. That shows your funds have performed well over the past market cycles. However, at 61, your goals should now focus on protecting this growth and maintaining steady income for the future.

Since you mentioned you do not require the money now, your objective is not liquidity but long-term preservation and efficient reinvestment.

So, the decision is not about selling or staying fully invested; it is about aligning your portfolio with your current risk capacity and life stage.

» Why You Should Not Exit Fully

Even if the funds have doubled, withdrawing everything is not ideal. Equity mutual funds generate wealth through long compounding cycles. If you exit completely, you might lose the power of long-term compounding that continues even after doubling.

Equity markets move in cycles. Gains may pause for some time but continue again after corrections. Staying invested in strong, diversified funds helps capture further growth with lower average risk.

Hence, the goal should be to rebalance, not to exit fully.

» The Case for Partial Rebalancing

At 61, it is wise to shift part of your portfolio to safer assets. A balanced allocation protects you from sudden market falls, especially when you are near or post-retirement.

You may keep around 50% of your corpus in equity mutual funds and shift the rest to hybrid or short-term debt funds.

This structure allows you to continue growing wealth while also creating a buffer of stability. The returns may reduce slightly, but your peace of mind and capital safety increase.

» How to Reshuffle Your Portfolio

Rebalancing should be done gradually. You can redeem a part of your profit and shift it to lower-volatility investments. This process ensures that you book some profit while still participating in the market growth.

– Identify the equity funds that have grown substantially beyond your allocation plan.
– Redeem a portion (for example, 25–30%) of those funds.
– Move that amount to conservative hybrid funds or short-duration debt funds.
– Keep the remaining equity portion intact for long-term compounding.

This way, you convert part of your profit into safety without disturbing your long-term growth engine.

» Reinvestment Options for the Booked Profit

You mentioned that you do not need the money for expenses. So, the booked profits should continue to work for you efficiently.

You can reinvest them as follows:

– In hybrid mutual funds that blend equity and debt. They offer moderate growth with lower volatility.
– In short-term debt funds that provide stability and regular liquidity.
– In arbitrage funds that behave like debt but offer tax efficiency similar to equity.

This structure lets you enjoy better tax-adjusted returns compared to bank deposits, while reducing risk exposure.

» Why Not to Shift Fully into Index Funds

Many investors think that after a big rally, switching to index funds reduces risk. However, index funds have several disadvantages for your stage.

Index funds simply copy the index; they do not actively manage allocation. When markets fall, index funds also fall equally. They do not protect you during corrections.

Active mutual funds, managed by experienced fund managers, can adjust allocation, book profits, and identify new opportunities.

At 61, it is better to stay with actively managed funds through a Certified Financial Planner, as professional oversight ensures timely adjustments and risk management.

» Direct vs Regular Plans Consideration

You seem to be managing investments directly. While direct plans reduce expense ratio slightly, they also shift the monitoring and review responsibility entirely to you.

Regular plans, through a Certified Financial Planner, ensure ongoing review, rebalancing, and discipline. At 61, that professional support is valuable.

Even a small wrong move or delayed correction can affect long-term security. Hence, investing through regular plans managed by a qualified CFP is more beneficial and stress-free.

The service cost is justified by the improved performance and protection from emotional mistakes.

» Tax Considerations Before Withdrawing

Since you plan to redeem partially, consider the tax rules carefully.

For equity mutual funds:
– Long-term capital gains above Rs 1.25 lakh in a financial year are taxed at 12.5%.
– Short-term capital gains (less than one year) are taxed at 20%.

You can stagger withdrawals over different financial years to reduce the taxable amount. A Certified Financial Planner can guide you in scheduling redemptions efficiently to save tax.

For debt mutual funds, gains are taxed as per your income slab. Hybrid funds with more equity allocation retain equity taxation benefits.

Hence, reinvestment planning should also keep taxation in mind.

» Evaluating the Quality of Your Current Funds

Before you reshuffle, review the quality of your mutual funds.

– Check if any fund is underperforming its peers consistently for more than a year.
– If yes, you can switch that portion into better-performing funds within the same category.
– Continue with funds that show consistent long-term performance and experienced fund management.

Do not sell simply because the value doubled. Growth should be judged by consistency, not short-term peaks.

» Aligning Portfolio with Your Life Stage

At 61, the goal is financial peace and steady growth, not aggressive wealth accumulation.

A healthy asset mix could look like this:
– Around 45–50% in equity mutual funds (large-cap, flexi-cap, and multicap).
– Around 35–40% in hybrid or conservative hybrid funds.
– Around 10–15% in short-term debt or liquid funds for safety and liquidity.

This balance ensures that your money continues to grow, remains protected, and can be accessed easily when needed.

» When and How to Review

Review your portfolio once every six months with your Certified Financial Planner.

– Check if asset allocation is drifting due to market movement.
– Rebalance whenever equity exceeds your planned percentage by more than 10%.
– Track fund performance, expense ratios, and consistency.

Avoid reacting to short-term volatility. Long-term discipline matters more than temporary ups and downs.

» Avoiding Common Mistakes

At this stage, you must avoid some common investor mistakes:

– Don’t withdraw all profits just because funds have doubled. That stops compounding.
– Don’t invest all profits in one new scheme. Diversification is key.
– Don’t switch funds frequently; every switch resets compounding.
– Don’t invest in direct equities or speculative products for “extra return.”

Your focus should remain on safety, consistency, and peace of mind.

» Role of Liquidity and Emergency Fund

Even though you do not need money now, keep a small emergency fund in liquid mutual funds or bank deposits.

This ensures that if unexpected expenses arise—medical, family, or personal—you do not disturb your main investments.

This fund can be around 6 to 12 months of your monthly expenses.

» Estate Planning and Nomination

Since you are 61, estate planning becomes an important part of your financial management.

Ensure that all your mutual fund investments, bank accounts, and insurance policies have updated nominees.

You can also prepare a simple Will specifying how your investments should be distributed. This avoids future confusion for your family and ensures smooth transfer.

Your Certified Financial Planner can help structure this without any legal complication.

» Emotional Aspect of Investing at 61

You have already built wealth successfully. Now your task is to protect it and allow it to grow steadily.

Do not chase short-term market excitement. Let your disciplined approach continue as before.

Your simplicity and minimalist lifestyle already give you a great advantage. You can afford to focus on quality rather than quantity.

Let compounding continue quietly for another decade, and your wealth will grow even more comfortably.

» Finally

You have already achieved what most investors aim for—discipline, patience, and growth. Now it is time to fine-tune your portfolio rather than overhaul it.

– Don’t withdraw fully; do partial rebalancing.
– Shift some profits to safer hybrid or debt funds.
– Keep 50% in equity for continued growth.
– Reinvest profits wisely with professional guidance.
– Avoid direct or index funds; prefer regular plans with Certified Financial Planner oversight.
– Manage taxation, liquidity, and estate planning together for a 360-degree approach.

Your financial discipline is your biggest strength. With careful rebalancing and continuous monitoring, your portfolio will stay strong, stable, and well-aligned for the years ahead.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment