I have a query regarding mutual funds; I hope you will be kind enough to assist.

I am 31 years old and so far I only invest in PPF but it will not be enough for a stable retirement income. I am aiming to create a 2 crore corpus in 20 years approximately; how much will I need to invest in mutual fund SIPs and what are the recommended funds for me? I am open towards taking a little risk. 

Also how should I proceed with my current PPF account as I want to continue with it as well in a limited manner?

Ans:

1. Please continue with PPF
2. Rs. 16,000 per month for 20 years will create a corpus of Rs. 2 crs
3. Funds that you may consider are as below

• HDFC Index Fund - Sensex Plan - Regular Plan - Growth
• Samco Flexi Cap Fund - Regular Plan - Growth
• UTI MNC Fund - Growth Plan
• Parag Parikh Flexi Cap Fund- Regular Plan Growth

Ans:

1. Please continue with PPF
2. Rs. 16,000 per month for 20 years will create a corpus of Rs. 2 crs
3. Funds that you may consider are as below

• HDFC Index Fund - Sensex Plan - Regular Plan - Growth
• Samco Flexi Cap Fund - Regular Plan - Growth
• UTI MNC Fund - Growth Plan
• Parag Parikh Flexi Cap Fund- Regular Plan Growth

Ans: Investment Plan for a Rs 20 Crore Corpus in 25 Years
Your goal is clear, and your approach is strong. You are already investing Rs 35,000 in SIPs with a 10% step-up, along with Rs 10,000 in PPF. Achieving Rs 20 crore in 25 years requires discipline, strategic fund selection, and regular review.

Your current approach of systematic investments, step-up, and long-term horizon works in your favour. However, the choice of funds and asset allocation will be crucial.

Equity Allocation for Aggressive Growth
Since you have a long horizon and an aggressive mindset, equity should dominate your portfolio. A well-diversified portfolio across different equity categories is needed.

Large-Cap Funds (30%)

These funds provide stability and consistent returns.
They invest in India’s top companies, reducing volatility.
Suggested allocation: Rs 10,500 per month.
Mid-Cap Funds (25%)

These funds offer a balance of growth and risk.
They can deliver high returns over the long term.
Suggested allocation: Rs 8,750 per month.
Small-Cap Funds (20%)

These funds have the highest potential for growth.
They are volatile but can generate superior returns.
Suggested allocation: Rs 7,000 per month.
Flexi-Cap Funds (15%)

These funds dynamically allocate across large, mid, and small caps.
They offer flexibility based on market conditions.
Suggested allocation: Rs 5,250 per month.
Value or Contra Funds (10%)

These funds invest in undervalued companies.
They are good for long-term wealth creation.
Suggested allocation: Rs 3,500 per month.
Role of PPF in Your Portfolio
You are investing Rs 10,000 per month in PPF, which provides a stable, tax-free return.

Advantages:

Provides safety and tax benefits.
Acts as a diversification tool.
Limitations:

Returns are lower compared to equities.
Lock-in period restricts liquidity.
Keeping PPF is fine for stability, but don’t rely on it for aggressive wealth creation.

Importance of Step-Up SIP Strategy
Your 10% annual SIP increase is excellent. It ensures:

Your investments grow in line with inflation.
Higher compounding benefits over time.
Lesser burden in later years.
Stick to this plan to maximise your corpus.

Asset Rebalancing & Portfolio Review
Review your portfolio every year.
Rebalance if allocation drifts significantly.
Continue investing in quality funds with strong track records.
Avoid switching funds frequently. Long-term compounding is key.

Final Insights
You are on the right track with SIPs and step-up strategy.
A well-diversified portfolio across large, mid, small, flexi, and value funds is ideal.
PPF adds safety but is not a high-return vehicle.
Stick to long-term investing and review annually.
With discipline and patience, Rs 20 crore in 25 years is achievable.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

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

Ans: our approach to systematic investment is excellent. A disciplined SIP strategy, along with annual increments, can generate significant wealth over 20 years. Below is a detailed assessment and recommendations.

Key Observations
Medium Risk Preference: You prefer moderate risk. A balanced mix of funds is required.

Long Investment Horizon: 20 years is sufficient for equity to outperform other asset classes.

SIP with Annual Increment: Increasing the SIP by 10% each year enhances returns through compounding.

Target Corpus of Rs. 1 Crore: Requires a structured plan with the right fund selection.

Disadvantages of Direct Funds
No Certified Financial Planner Guidance: Direct funds lack professional monitoring and timely strategy adjustments.

Higher Risk of Wrong Selection: Fund selection requires expertise. Investors may choose underperforming funds.

No Portfolio Rebalancing Support: Regular funds through an MFD with a Certified Financial Planner ensure periodic review.

Not Ideal for Long-Term Wealth Creation: Actively managed regular funds provide higher growth potential.

Fund Selection Strategy
Diversified Equity Allocation: Large-cap and flexi-cap funds provide stability and steady growth.

Mid and Small-Cap Exposure: A portion in mid-cap funds ensures long-term high growth.

Hybrid Fund for Stability: Including a balanced fund reduces volatility while maintaining returns.

Thematic/Sectoral Fund for Additional Growth: A small allocation to specific sectors enhances portfolio returns.

Estimated Returns After 20 Years
Exact future values depend on market conditions.

Assuming 12% annual returns, the corpus can grow significantly.

Increasing SIP by 10% annually improves final wealth accumulation.

A disciplined approach ensures financial goals are met.

SIP Required for Rs. 1 Crore Corpus
A systematic approach can help reach the Rs. 1 crore target.

The required SIP amount depends on expected returns and tenure.

Higher returns need a well-diversified fund selection strategy.

Regular monitoring ensures alignment with financial goals.

Final Insights
Your SIP plan is well-structured. Increasing contributions yearly accelerates wealth creation.

Diversification across market caps and sectors improves long-term returns.

Avoid direct funds. Investing through an MFD with a Certified Financial Planner optimizes performance.

Stay invested for the full tenure. Market fluctuations are normal in long-term investing.

Periodic review of fund performance ensures continued alignment with financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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