A portfolio of 10 Crore in next 5 years. Want to start 80-90 k sip in MF but not in Indian market. YOUR ADVISE REQUIRED? Me and my wife jointly monthly income 3lakh per month. By profession I am a PVC flex material trader, my wife is training...

A portfolio of 10 Crore in next 5 years. Want to start 80-90 k sip in MF but not in Indian market. YOUR ADVISE REQUIRED? Me and my wife jointly monthly income 3lakh per month. By profession I am a PVC flex material trader, my wife is training centre owner. Having two cute nd naughty son 4 yrs and 2 yrs old. Myself Vishal Choubey nd My wife shanti both aged 39 years. Having 5 houses Rental income arround 55k per month collectively. 1 CR term insurance for both of us in case something happens. An lic of 6 Lac going to mature 2026. Till 31st March 2024 PPF Vishal (10L)+ 10(L) shanti. Ujjivan bank 9k share @ 21rs, Mix share 2Lac. Edelweiss greater China 3.1Lacs, Axis China fund 5.2 Lakh, An sip of 49000/- in Nippon Taiwan current investment 7.37 Lakh market value 9.53 lakh, 3k sip in icici tax fund. Idfc tax fund an investment of 70k is now 2.6 Lakh, Many fund got doubled in last 3-4 years Approx 50 lakh MF portfolio. 14 Lakh. A land parcel of 1 acre approx 40 Lakh. All the assets are created in last 10yrs. Wish to sell one apartment and invest into China fund your advise required?

Ans: Hello Vishal and Shanti,

It's wonderful to see that you've built a substantial portfolio and are actively planning for your financial future. Let's address your queries and provide some advice:

Investment in International Markets:
Diversifying your investment portfolio by investing in international markets is a prudent strategy to mitigate risks and capture global growth opportunities.
Given your intention to start SIPs in MFs outside the Indian market, consider researching and selecting funds that focus on regions or countries with strong economic growth prospects, such as the US, Europe, or emerging markets like China.
Look for mutual funds or exchange-traded funds (ETFs) that have a track record of consistent performance and are managed by reputable fund houses with expertise in international markets.
Selling Apartment and Investing in China Fund:
Selling one of your apartments to invest in a China-focused fund can be a strategic move, provided you have thoroughly evaluated the risks and potential returns associated with investing in the Chinese market.
Consider factors such as geopolitical tensions, regulatory changes, and economic stability when making investment decisions in international markets.
Consult with a financial advisor to assess the suitability of this investment strategy based on your overall financial goals, risk tolerance, and investment horizon.
Reviewing Existing Investments:
Periodically review your existing investments, including MFs, shares, and other assets, to ensure they remain aligned with your financial objectives and risk profile.
Take advantage of opportunities to rebalance your portfolio and reallocate funds to assets that offer better growth prospects or align with your evolving financial goals.
Risk Management and Insurance:
Continue prioritizing risk management by maintaining adequate insurance coverage, such as your term insurance policies, to protect your family's financial well-being in case of unforeseen events.
Regularly assess your insurance needs and consider updating your coverage as your financial circumstances change over time.
Long-Term Financial Planning:
Given your joint monthly income, rental income from properties, and diverse investment portfolio, continue focusing on long-term financial planning to achieve your goal of building a portfolio worth 10 Crore in the next 5 years.
Monitor your progress towards this goal regularly and make adjustments as necessary to stay on track.
Overall, your proactive approach to financial planning and willingness to explore international investment opportunities bodes well for your financial future. Continue seeking expert advice and stay disciplined in executing your investment strategies.

Ans: I appreciate your dedication to investing since 2010 and your clear goal to gift these investments to your children. Let’s assess your portfolio and offer a 360-degree review.

Your Current Investment Picture

You have Rs 20.58 lakhs invested in mutual funds.

Your corpus is Rs 41.78 lakhs now.

Your overall XIRR is 14.41%, which is very good.

You have a good mix of SIPs and lumpsum investments.

You have also diversified across different mutual fund types.

Your regular SIP of Rs 50,000 shows your disciplined approach.

Your Other Savings and Financial Security

You have enough in FD, Post Office SCCS, PO MIS, LIC Pension, SBI Life Pension, NPS, and EPF Higher Pension.

These sources will cover your living expenses and medical needs.

You have health insurance to take care of future health costs.

Your children are settled and financially secure.

This lets you take a long-term view for your mutual fund investments.

Portfolio Evaluation and Insights

Your portfolio has grown steadily over the years.

Your best-performing investment is in SBI Contra Regular, with 17.3% XIRR.

You are considering withdrawing 10% of SBI Contra Regular to invest in Flexi Cap / Balanced Advantage Funds.

You also have direct mutual fund schemes in your portfolio.

Let’s now analyse these areas in detail.

Direct Mutual Funds vs Regular Funds

You hold direct mutual funds.

Direct funds need your own time and knowledge to manage well.

They don’t give you personal guidance or review of your portfolio.

Market situations change, and rebalancing needs to be done.

If you invest through regular funds via a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential, you get continuous help and monitoring.

The CFP’s insights will help you with tax planning, rebalancing, and goal-based investing.

Direct funds don’t give you this personal, professional support.

Hence, I suggest you consider switching your direct funds to regular funds with the support of an MFD and a CFP.

Disadvantages of Index Funds

Your portfolio has index funds like Navi Nifty 50 Index, Kotak Nifty Next 50 Index, and Motilal Oswal Nifty 500 Momentum 50.

Index funds just copy the index.

They do not beat the market. They only match it.

During market crashes, index funds fall without protection.

Actively managed funds have a professional fund manager.

They use in-depth research to try to outperform the market.

These funds can manage risk better in bad markets.

Actively managed funds also use tactical asset allocation to protect your money.

For your long-term family gifting goals, actively managed funds are better.

Your Withdrawal Plan

You plan to withdraw 10% of SBI Contra Regular and invest in Flexi Cap / Balanced Advantage Funds.

This is a good plan as you are taking out some profit and putting it in diversified funds.

Flexi Cap Funds and Balanced Advantage Funds are managed actively.

They will give you better risk management.

This will also help you reduce concentration risk in your portfolio.

Keep this 10% withdrawal as a staggered plan.

Don’t do it all at once.

Spread it over a few months to average out market ups and downs.

Suggested Approach for Your Portfolio

Keep your core portfolio in actively managed diversified funds.

Continue your SIP in actively managed funds for long-term growth.

Slowly reduce your exposure to index funds over time.

Move money from index funds to actively managed funds.

Balanced Advantage Funds are good to balance equity and debt.

Flexi Cap Funds are good for flexibility across large, mid, and small caps.

You can keep a mix of Flexi Cap Funds and Balanced Advantage Funds.

They will help reduce risk and improve returns.

Asset Allocation Review

Even though you are financially secure, asset allocation is still key.

Maintain a healthy balance between equity and debt.

This ensures that if the market goes down, you are protected.

If your equity allocation is above 60%, bring it down to around 50-55% gradually.

Keep the rest in balanced advantage or conservative hybrid funds.

This keeps your investments stable and growing.

Tax Planning for Mutual Funds

You are likely to withdraw some money from SBI Contra Fund.

Remember, as per the new rules, for equity mutual funds, LTCG above Rs 1.25 lakh is taxed at 12.5%.

Short-term capital gains are taxed at 20%.

You may want to stagger your withdrawals to keep gains below Rs 1.25 lakh each financial year.

This will help reduce your tax liability.

A CFP can help you plan these staggered withdrawals better.

Estate and Gifting Planning

You want to gift your investments to your children.

This is a thoughtful and loving gesture.

For gifting, you can keep your investments in your own name.

When you pass away, the investments will go to your children as per your nomination.

It’s good to update your mutual fund nominations.

Also, create a simple Will to say who will get which investment.

This will make it easy for your children to claim them later.

If you want, you can make joint holding in mutual funds with your children.

Joint holding makes the transition smoother.

Discuss this with a lawyer or CFP if you need guidance.

Review of Other Investments

Your FD, Post Office SCCS, PO MIS, LIC Pension, SBI Life Pension, NPS and EPF Higher Pension give you a strong foundation.

They ensure you don’t need to worry about regular cash flow.

You can keep them as they are for safety and steady income.

They will also help in emergencies.

Health Insurance and Emergency Corpus

You already have health insurance, which is very good.

Keep reviewing your health cover every 2-3 years.

If medical costs go up, top up your health cover.

Keep an emergency fund equal to at least 12 months of your expenses in a safe place.

This gives you peace of mind and stability.

Periodic Portfolio Review

Even if you don’t need this money, it is good to review your portfolio every year.

See if your funds are doing well.

If any fund is not performing well for 2-3 years, consider moving to a better fund.

Don’t chase short-term performance.

Focus on steady and consistent growth.

Role of a Certified Financial Planner

Your investments are for your children’s future.

A CFP will help you plan this carefully.

A CFP will guide you on estate planning, nomination, and taxes.

A CFP will give you an unbiased view and ongoing monitoring.

This personal guidance is very valuable as market and rules keep changing.

Avoid Insurance-Cum-Investment Products

You mentioned LIC Retirement Pension, SBI Life Pension, NPS.

These are fine for basic retirement security.

But in future, avoid investing in insurance-cum-investment products like ULIPs.

They have high charges and low returns.

Mutual funds are more transparent and flexible.

Finally

Your portfolio is strong and well planned.

Your disciplined SIP approach is very good.

Switching direct funds to regular funds with CFP support will give you better management.

Reducing index funds and focusing on active funds will improve your returns.

Keep your estate planning up to date with nominations and a Will.

Don’t worry about short-term market changes.

Your children will benefit from your patient and thoughtful investing.

Keep learning and reviewing your investments with a CFP to keep them future-ready.

If you need help with switching your direct funds or making an estate plan, let me know.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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