Hi..I have a portfolio of SIPs, with below mutual funds. Please advise. Parag Parikh flexi cap - 20000 Mirae Asset Emerging bluechip - 12000 ICICI Prudential Nifty 50 index - 10000 Sbi magnum mid cap - 5000 Motilal Oswal midcap - 3000 Now I want to top up my investment with 40000. All this is for long term goal at least for 15 years for wealth creation. I have covered my basics and have emergency funds for at least 9 months in FD. Please advise. Thanks

Ans: Hello Rishu, thanks for writing to me. The funds you invest in are good funds. As you want to increase your investment by Rs.9,000 every month, you can consider beginning investments in:

1-Edelweiss NIFTY Quality 100 30 Index Fund: Rs.3,000 per month
2-SBI Focused Equity Fund: Rs.3,000 per month
3-Motilal Oswal Focused Fund: Rs.3,000 per month.

Ans: It's great that you're investing your monthly surplus in SIPs to build your wealth.

You have a well-diversified portfolio and the funds in your portfolio are performing well in the current market scenario. In the finance planning of any portfolio, we consider many factors, including client age, risk profile, current asset allocation, etc.

With your existing accumulated bulk investments of Rs 9.06 lakhs and ongoing SIPs of Rs 20,000 you will be able to accumulate the corpus after 9 years (2033) of Rs 64 lakhs with expected returns of 12%.

To achieve your wealth target of Rs 1 crore, it's advisable to increase your current investments. Considering your existing bulk investment of Rs 9.06 lakhs, an additional monthly investment of approximately Rs 39,000 is required. As you are already contributing Rs 20,000 per month through SIPs, an incremental SIP amount of around Rs 19,000 would be required.

Ans: Reviewing Your SIP Portfolio and Investment Strategy
Hi Anil, that's great! You've started investing early and have a well-rounded financial plan. Let's analyze your SIP portfolio and suggest some tweaks for your goals.

Current Portfolio Assessment:

Diversification: You have 9 SIPs across various fund categories (ELSS, Multicap, Smallcap, Midcap, Flexi-cap, Sectoral) which is good for diversification.

Actively Managed Funds: Your focus on actively managed funds allows experienced fund managers to pick stocks aiming for higher returns than the market. Actively managed funds come with higher fees compared to passively managed funds.

Direct Plans: Choosing direct plans saves you on expense ratio compared to regular plans. However, you miss out on the personalized advice and services offered by a Mutual Fund Distributor (MFD) with a CFP credential.

Considering Your Goals:

Daughter's Education (10 yrs): For a 10-year goal, a balanced approach with some bias towards aggressive funds might be suitable.

Retirement Corpus (15 yrs): A more aggressive portfolio with a higher allocation to equity funds could potentially help accumulate ?1 crore in 15 years. But remember, this comes with higher risk.

Optimizing Your Portfolio for Growth:

Increase Equity Exposure: Consider increasing your allocation to Large-cap and Mid-cap funds. These can offer good growth potential over the long term.

Reduce Sectoral Funds: Sectoral funds focus on a specific industry, which can be risky if the sector underperforms. Consider reducing or eliminating them.

Review Fund Overlap: Some of your fund choices might have overlapping investment styles. Look for funds that complement each other.

Professional Guidance: A CFP can help you fine-tune your SIP amounts across funds based on your risk tolerance and goals.

Remember: Past performance is not a guarantee of future results. Actively managed funds involve inherent risks associated with stock markets.

Stepping Up SIPs:

Annual Increase: A 20% annual SIP increase is a good strategy to build your corpus over time. Remember to review your SIPs periodically and adjust as needed.
Overall, you're on the right track, Anil! A CFP can assist you with a detailed portfolio review, personalized recommendations for aggressive funds suitable for your 10 & 15-year goals, and help you navigate the ever-changing market landscape.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Your current SIP portfolio seems well-diversified, but you may consider some adjustments to align with your goals and risk appetite. Given your long-term horizon and willingness to take high risk, you can consider the following suggestions:

Increase Allocation to Equity: Since you have a higher risk tolerance, you may consider increasing your allocation to equity funds, especially small-cap and mid-cap funds, which have the potential for higher returns over the long term.

Review ELSS Funds: While ELSS funds offer tax benefits, ensure you're comfortable with the lock-in period. You may want to diversify across different categories within equity funds for better risk management.

Evaluate NPS Contribution: Assess the performance and suitability of NPS vis-a-vis other retirement-focused investment options like equity mutual funds, considering your risk appetite and return expectations.

Regularly Review and Rebalance: Given your investment horizon, regularly review your portfolio's performance and make adjustments as necessary. Consider rebalancing your portfolio annually to maintain the desired asset allocation.

Consider Professional Advice: Given the complexity of investment decisions and tax implications, consider seeking advice from a certified financial planner who can provide personalized recommendations based on your financial goals, risk tolerance, and investment horizon.

Ans: It's commendable that you're regularly investing through SIPs and looking to further diversify your portfolio. Here's a suggestion for investing an additional Rs 15,000 per month:

Since you're concerned about volatility in small-cap funds, consider allocating a portion of the additional Rs 15,000 to large-cap or multi-cap funds for stability and downside protection.
Look for funds with a proven track record of consistent performance and experienced fund managers. Consider factors like expense ratio, fund size, and portfolio composition when evaluating options.
Given your long-term investment horizon, you can afford to take some risk for potentially higher returns. Hence, consider allocating a portion of the additional SIP amount to mid-cap or small-cap funds for growth opportunities.
Remember to maintain a balanced portfolio across different market segments and asset classes to manage risk effectively.
Regularly review your SIP investments and make adjustments as needed based on changes in your financial situation or market conditions.
Consult with a Certified Financial Planner to receive personalized advice tailored to your specific needs and goals.
By diversifying your SIP investments across different market segments and staying disciplined with your investment strategy, you can maximize the potential for long-term wealth creation while managing risk effectively.