In mutual Fund to tops up every year What is your advice for that Top up in same mutual fund which is performing good or to start new fund?

Ans: Hello and thanks for writing to me.

The funds you invest in are good funds and you can continue to invest in them.

If you state your objectives on what you wish to achieve, your time horizon, risk appetite etc, then I may recommend other schemes.

Ans: It's commendable that you've been investing systematically in mutual funds since 2017 and have built a substantial portfolio. Your strategy of continuing for another 10 years with a 10% step-up every 2 years reflects a disciplined approach towards wealth creation.
Let's review your current portfolio and make some suggestions:
1. SBI Small Cap, Nippon Small Cap, DSP Mid Cap: Small and mid-cap funds have the potential for high growth but come with higher volatility. Since you're looking at a long-term horizon, these can be suitable for wealth accumulation. However, monitor their performance closely and be prepared for fluctuations.
2. Parag Parikh Flexi Cap, SBI International Fund, Motilal Oswal Tax Saving: These funds offer diversification across market caps and geographies, which is beneficial for risk management. Parag Parikh Flexi Cap, in particular, follows a flexible approach and invests in a mix of equity, debt, and international stocks, providing stability.
3. Axis Next 50 Index Fund: Index funds offer low-cost exposure to a basket of stocks mirroring a particular index. While they provide diversification, they may lack the potential for outperformance compared to actively managed funds. However, they can be a valuable addition to your portfolio for passive investing.
Considering your investment horizon and the step-up strategy, you can continue investing in these funds with periodic reviews. It's essential to rebalance your portfolio periodically to ensure alignment with your goals and risk tolerance.
Given the significant portfolio value, it's advisable to seek advice from a Certified Financial Planner who can provide personalized guidance tailored to your financial objectives, risk appetite, and tax considerations.
Keep up the good work of systematic investing, and with a well-diversified portfolio, you're on track to achieve your long-term financial goals.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: It's fantastic to see your commitment to investing in mutual funds for the long term. Let's explore how you can continue to grow your portfolio over the next decade:

• Your portfolio's current value of Rs. 21,00,000 is impressive and reflects your disciplined approach to investing.
• With a goal to continue investing for another 10 years, you're setting yourself up for significant wealth accumulation.
• The 10% step-up in investment every 2 years is a smart strategy to increase your contributions gradually over time.
• Your selection of mutual funds covers a diverse range of asset classes and market segments, providing ample growth potential.
• It's essential to periodically review your portfolio's performance and make adjustments as needed to stay aligned with your financial goals.
• Consider consulting with a Certified Financial Planner to ensure your investment strategy remains optimal and aligned with your objectives.
• Stay focused on your long-term goals and maintain discipline in your investment approach, even during market fluctuations.
• Remember, patience and consistency are key virtues in wealth creation through mutual fund investments.
• Keep monitoring your progress regularly and celebrate milestones along the way to stay motivated on your financial journey.
• With dedication and prudent financial planning, you're well-positioned to achieve your wealth accumulation goals in the years ahead.

Ans: You have done a good job by investing regularly through SIPs in different categories of mutual funds. Staying invested for five years shows patience and discipline. This habit is the real strength of wealth creation. Let us assess your portfolio in a structured way and explore what can be improved.

» Assessment of Your Current Portfolio

Your portfolio covers small-cap, mid-cap, and large-cap categories. This gives you exposure across different market segments. That is a positive start.

The large-cap fund brings stability. It invests in established companies that usually give steady growth.

The mid-cap fund offers a balance between growth and stability. It can grow faster than large-cap but has slightly higher risk.

The small-cap fund adds aggressive growth potential. It carries higher volatility but can deliver strong long-term gains.

Since you are 39, you have time on your side. The equity exposure you have taken through these funds is suitable for wealth creation over the long term.

» Performance and Holding Period Analysis

Five years is a decent period, but equity funds ideally need longer. Especially small-cap and mid-cap funds perform better when held for 7 to 10 years.

Your first two funds have completed about five years. You can start evaluating their performance against their respective benchmark indices and category averages.

If both are giving above-average returns compared to peers, continue them.

If any fund has underperformed for more than three years continuously, you can consider a gradual exit.

The last fund has been running only for 18 months. It is too early to judge. All equity funds go through short-term ups and downs. So, stay invested at least for 5 to 7 years before making any change.

» Importance of Staying Invested

Mutual fund SIPs work best through compounding and rupee-cost averaging. By continuing your SIPs, you buy more units when markets are down and fewer when markets are high. Over time, this smooths out the average cost.

Stopping or switching frequently disturbs this process. Equity wealth creation takes time. Even good funds need market cycles to prove their strength.

Therefore, do not be influenced by short-term volatility. Continue investing with patience unless your funds are consistently lagging behind their category peers.

» Portfolio Diversification and Overlap Check

Although you have selected three different categories, all are from one fund house. Having all schemes from the same AMC is not always ideal.

Each AMC follows its own investment style and risk approach. When all funds belong to one AMC, there may be portfolio overlap. The same stocks might appear in different schemes.

This reduces the benefit of diversification. A Certified Financial Planner can help check portfolio overlap and suggest diversification across different AMCs.

If the overlap is high, consider shifting one or two schemes to other reputed fund houses with consistent long-term track records. This helps reduce concentration risk.

» Reviewing Fund Allocation

Your risk capacity and financial goals decide how much you should allocate to large, mid, and small-cap funds.

If you need stability, increase the weightage of large-cap funds.

If you want long-term growth, keep some exposure to mid and small-cap.

Avoid overexposure to small-cap because it fluctuates sharply in volatile markets.

A balanced combination might look like this –
Large-cap 40%, Mid-cap 35%, Small-cap 25%.

However, this ratio must align with your personal goals, investment horizon, and risk tolerance.

» Rebalancing Strategy

Periodic rebalancing is important to control risk and capture gains. Over time, one fund category may grow faster and disturb your target ratio.

For example, if small-cap grows sharply, it can form a larger part of your portfolio. In such cases, shift some amount from small-cap to large-cap or mid-cap to maintain balance.

Rebalancing once a year is enough. It helps protect gains and ensures your portfolio remains aligned with your goals.

» Importance of Regular Funds and Role of Certified Financial Planner

You have invested in regular plans through a distributor. That is a wise move. Many investors think direct plans are cheaper. But they ignore the value of professional guidance.

Regular plans come with ongoing support, periodic reviews, and rebalancing help from a Certified Financial Planner.

Direct plans leave you alone. You have to track performance, do rebalancing, and handle taxation yourself.

Regular plans help avoid emotional decisions during market swings. The planner keeps your investments aligned with goals and risk profile.

Over time, the planner’s advice adds more value than the small expense difference between direct and regular plans.

» When to Switch Funds

Switching should not be based on short-term performance or market news. Switch only if –

The fund is consistently underperforming its category peers for more than three years.

The fund has a major change in management or investment philosophy.

The fund’s risk level no longer suits your profile.

Before switching, always consult a Certified Financial Planner. They can analyse the rolling returns, consistency, and risk-adjusted performance of each fund. This ensures your decisions are data-based, not emotional.

» Aligning SIPs with Your Goals

Every SIP should have a clear purpose. It could be for retirement, children’s education, or wealth creation. When goals are defined, you can decide how long to stay invested and what risk to take.

If your SIPs are not linked to specific goals, start doing that now. It gives you better clarity and helps you avoid premature withdrawals.

Also, the investment horizon for each goal should decide your fund category:

Short-term goals (less than 3 years): Keep in debt or liquid funds.

Medium-term goals (3 to 5 years): Use balanced or large-cap funds.

Long-term goals (above 5 years): Use mid-cap and small-cap funds.

» Taxation Aspect

Under the new rules, long-term capital gains from equity mutual funds above Rs 1.25 lakh per year are taxed at 12.5%. Short-term gains are taxed at 20%.

This makes it even more important to stay invested for longer. The longer you stay, the lower the tax impact on your returns due to compounding.

Avoid unnecessary redemptions or switches. Each transaction can trigger tax liability.

» Behavioural Discipline

One of the biggest success factors in mutual fund investing is behaviour. Most investors do not lose because of bad funds. They lose because of bad timing or panic selling.

When markets fall, continue your SIPs. You are buying units at cheaper prices. When markets recover, your gains multiply faster.

Keep emotions aside and stick to your plan. The market rewards patience and consistency.

» Role of Periodic Review

Review your portfolio once or twice a year. Do not check daily or weekly. That leads to unnecessary anxiety.

In each review, assess three things –

Fund performance compared to category average.

Asset allocation alignment with goals.

Any changes in your financial situation.

Based on this, make minor adjustments if needed. But do not overhaul your portfolio frequently.

» Benefits of Staying with Actively Managed Funds

Actively managed funds have professional fund managers who study companies, sectors, and valuations. They can make changes when markets shift.

In comparison, index funds only copy the index. They cannot react to market conditions. When the market falls, index funds fall equally. They also carry concentration risk because the top few stocks dominate the index weight.

Actively managed funds have the flexibility to hold cash, shift sectors, and protect downside risk. Over long periods, well-managed active funds often outperform index funds after tax.

So, staying with actively managed funds like yours is a better strategy for wealth creation.

» Market Outlook and Investment Tenure

Equity markets go through cycles. Sometimes they move sideways for a few years, and then deliver strong growth later.

Your small and mid-cap funds will need time to show their true potential. Historically, they outperform large-caps when held for 8 to 10 years.

Since you are 39, you can easily continue your SIPs for another 10 to 15 years. That will align well with long-term goals such as retirement or children’s education.

» Contingency and Liquidity Planning

Ensure you have an emergency fund of 6 to 9 months of expenses. Keep it in liquid or ultra-short-term funds.

This protects you from redeeming your equity investments during market corrections. Equity SIPs should never be used for short-term needs.

Having this buffer ensures your long-term investments grow undisturbed.

» Insurance and Protection Planning

Before continuing or increasing your SIPs, make sure your family is well protected.

Take adequate term life insurance.

Have health insurance for the entire family.

If you already have any investment-cum-insurance or ULIP policies, surrender them and reinvest in mutual funds for better returns and flexibility.

Pure protection plans are cost-effective and leave more money available for investments.

» Future Growth Approach

If your income increases, raise your SIPs by at least 10% every year. This step-up approach helps you build wealth faster.

Also, as you get closer to your goals, gradually move from small-cap and mid-cap to large-cap or balanced funds. This protects gains from market volatility.

Always plan these transitions with a Certified Financial Planner to ensure your portfolio remains goal-aligned and tax-efficient.

» Finally

Your investment journey has started on the right path. You have shown consistency and discipline. Do not lose that focus.

Continue your SIPs for more years, review annually, and avoid frequent switches. Diversify across AMCs if needed, and align each SIP with a goal.

Actively managed regular funds, reviewed and guided by a Certified Financial Planner, can help you achieve strong, steady, and tax-efficient long-term growth.

Stay patient, stay invested, and let time compound your wealth.

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

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

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