Hi sir I started my investment in dsp mutual fund with 11,000 from July 2023 and in Bank of India mutual fund in small flexi and multi cap 4000 each every month from December what could be me return after 15 years

Ans: It's commendable to see your proactive approach towards investing. Your portfolio showcases a balanced mix across equity, debt, and tax-saving instruments, which is a good start.

Now, looking ahead 15 years is a bit like gazing into a crystal ball. The returns you can expect will depend on various factors like market conditions, fund performance, and economic trends. While past performance can give us some insights, it's not a guarantee of future returns.

Your current XIRR of 15.10% from ELSS funds over three years is a positive sign. This suggests that your investments are performing reasonably well.

As for the PPF and the SIPs, they're both solid choices for long-term investing. PPF offers tax-free returns and has a guaranteed interest rate, while SIPs provide the benefit of rupee-cost averaging and potential market-linked returns.

However, to optimise your portfolio further, we might consider:

Diversification: Ensure a broader asset allocation across various fund categories.
Review and Rebalance: Periodically review and rebalance your portfolio to align with your goals and risk tolerance.
Tax Efficiency: Keep an eye on tax implications to maximise post-tax returns.
Given the dynamic nature of markets, it's essential to review and adjust your portfolio periodically.

Ans: Your commitment to systematic investment plans (SIPs) reflects a prudent approach towards wealth accumulation at a young age. Let's analyze the potential returns from your investments over a 15-year horizon.

Understanding Investment Strategy
Investing 10,000 monthly in SBI Mid Cap Fund and 6,000 monthly in SBI Contra Fund for 15 years signifies a blend of growth and value investing strategies. These funds offer exposure to mid-cap stocks (SBI Mid Cap Fund) and undervalued stocks (SBI Contra Fund), aiming to capitalize on growth opportunities and market inefficiencies.

Estimating Returns
While it's challenging to predict exact returns due to market fluctuations, historical performance can provide insights. Mid-cap and contra funds typically offer higher returns compared to large-cap funds but come with increased volatility.

Considering an average annual return of 12-15% for mid-cap funds and 10-12% for contra funds over the long term, we can project the cumulative returns on maturity.

Calculation Example
Let's assume:

SBI Mid Cap Fund: Average annual return of 14%
SBI Contra Fund: Average annual return of 11%
Using these figures, we can estimate the future value of your investments using a SIP calculator or similar tool.

Conclusion
While precise returns may vary based on market conditions, economic factors, and fund performance, your disciplined approach to SIPs lays the groundwork for wealth creation over the long term. By staying invested and periodically reviewing your portfolio, you can maximize the potential returns and achieve your financial goals.

Best Regards,

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

Ans: You started investing in mutual funds in October 2017. Your SIP distribution across different funds has been consistent. With a total investment of Rs. 8 lakh, your current returns stand at approximately Rs. 18 lakh. This indicates a strong growth trajectory in your portfolio.

Long-Term Growth Potential
You plan to continue investing for another 15-16 years. This extended investment horizon gives your portfolio ample time to grow, taking advantage of market fluctuations and the power of compounding.

Potential Growth: Over the next 15 years, your investments could potentially grow significantly. The exact return will depend on various factors, including market conditions, fund performance, and economic factors. However, with consistent SIPs, your portfolio could achieve substantial growth.

Compounding Effect: The power of compounding will play a crucial role in your investment journey. By reinvesting your returns, your wealth can grow exponentially over time. This is especially true in the later years of your investment horizon.

Market Volatility: While the long-term outlook is positive, you must be prepared for market volatility. Staying invested during market downturns can ensure you benefit from eventual recoveries.

Fund Performance and Diversification
Your current portfolio is diversified across multiple mutual funds. This diversification helps reduce risk and allows you to tap into various market segments.

Review Fund Allocation: Regularly review the performance of your funds. If any underperform consistently, consider switching to better-performing options. However, avoid making frequent changes based on short-term market trends.

Active Fund Management: Actively managed funds, where fund managers make strategic decisions, often outperform passive index funds over the long term. This is particularly relevant in the Indian market, where active management can capitalize on emerging opportunities.

Expectations for Future Returns
While predicting exact returns is challenging, historical data and market trends can provide some insights.

Expected Returns: Over a 15-year period, equity mutual funds in India have historically provided annualized returns ranging from 12% to 15%. Assuming similar returns, your investment could potentially multiply several times over the next 15 years.

Portfolio Growth: With continued SIPs and assuming an average annual return of around 12-15%, your portfolio could grow significantly by the end of your investment horizon. This could help you achieve your long-term financial goals, whether it's retirement, children’s education, or wealth accumulation.

Importance of Staying the Course
Staying disciplined and committed to your SIPs is crucial for long-term success.

Consistency: Consistent investing, regardless of market conditions, ensures that you accumulate units at various price points. This averages out the cost and reduces the impact of market volatility.

Avoiding Market Timing: Trying to time the market can be risky. Instead, focus on your long-term goals and maintain a steady investment approach. Over time, this strategy has proven effective in wealth creation.

Tax Efficiency and Rebalancing
As your portfolio grows, consider tax efficiency and regular rebalancing to optimize returns.

Tax Planning: Understand the tax implications of your investments, especially the long-term capital gains tax. Planning ahead can help you minimize tax liabilities and maximize your post-tax returns.

Rebalancing: Regularly rebalance your portfolio to maintain your desired asset allocation. This ensures that your portfolio remains aligned with your risk tolerance and investment goals.

Final Insights
You are on the right track with your consistent SIP investments and a long-term perspective. Over the next 15-16 years, your portfolio has the potential to grow significantly, helping you achieve your financial goals. Stay disciplined, review your portfolio periodically, and make adjustments as needed to maximize returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

I am glad that you have got fantastic results on your MF sip investment. This has been possible since you timed your investment at the onset of a huge bull run.

But considering volatile nature of the stock market we cannot presume such extraordinary results can be sustained.

Hence for all our workings we consider a modest return of 13% from pure equity mutual fund schemes.

Therefore your monthly sip of 1.5 K over next 15 years+ the gains over last 3 years together may grow into a corpus of 18.72 L.

Also the lumpsum investment of 13 L may grow into a sum of 44.13 L after 10 years.

Happy Investing!!

You may follow us on X at @mars_invest for updates.

*Investments in mutual funds are subject to market risks. Please read all scheme related documents carefully before investing.