Puneet Asked on - Jun 16, 2024
Hello, I'm 35 years old. I'm planning to start a new cycle of SIPs and aspiration is to create a corpus of 1.5 crores in next 10 years. Monthly SIP is 50,000. Below are my mutual funds chosen: Quant midcap fund: 10,000, ICICI Prudential Bluechip Fund: 10,000, Quant Flexi Cap Fund: 10,000, SBI Small Cap Fund: 2,000, SBI PSU Fund: 8,000. Please suggest: - if the above chosen mutual funds are appropriate for this wealth generation, however, if no, please suggest alternatives and also advise if the amount chosen is apportioned is realistic. - if this SIP amount is adequate enough to generate the desired corpus? All are direct growth plans. Should I include Parag Parekh Flexi Cap Fund as well? Regards, Puneet
Ans: Puneet,
Your aspiration to create a corpus of Rs 1.5 crores in 10 years is commendable. Let's evaluate your current mutual fund choices and the allocation.
Current Allocation
Quant Midcap Fund: Rs 10,000
ICICI Prudential Bluechip Fund: Rs 10,000
Quant Flexi Cap Fund: Rs 10,000
SBI Small Cap Fund: Rs 2,000
SBI PSU Fund: Rs 8,000
Evaluation of Funds
Diversification: You have chosen a mix of large-cap, mid-cap, flexi-cap, small-cap, and sector funds. This ensures a diversified portfolio.
Risk Management: The inclusion of large-cap and flexi-cap funds helps balance the higher risk from mid-cap, small-cap, and sector funds.
Growth Potential: Mid-cap, small-cap, and flexi-cap funds offer high growth potential, though they carry higher risk.
Actively Managed Funds vs. Index Funds
Actively Managed Funds: Provide better adaptability to market conditions. Managed by professionals aiming to outperform the market.
Index Funds: Track specific indices and cannot adapt to market changes. May underperform compared to actively managed funds.
Disadvantages of Direct Plans
Lack of Guidance: Direct plans require self-research and decision-making.
Higher Risk: Greater potential for mistakes without professional advice.
Time-Consuming: Requires continuous monitoring and adjustments.
Benefits of Regular Plans Through CFP
Expert Advice: Certified Financial Planners (CFPs) provide tailored advice.
Holistic Planning: CFPs consider your overall financial goals and situation.
Ongoing Support: Regular reviews and adjustments to your strategy.
Is Your SIP Amount Adequate?
To assess if Rs 50,000 monthly SIP is adequate:
Expected Returns: Assuming an average annual return of 12-15%, your target is achievable.
Consistency: Staying invested for the full 10 years is crucial for compounding to work.
Adding Parag Parekh Flexi Cap Fund
Flexi Cap Funds: They offer a balance between risk and return by investing across market caps.
Evaluation: Adding another flexi-cap fund can further diversify your portfolio.
Suggested Adjustments
Review Sector Fund Allocation: Consider reducing the sector fund allocation if you want a more balanced portfolio.
Increase in Large-Cap Allocation: You may increase large-cap allocation for more stability.
Final Insights
Puneet, your current fund choices show a good mix of diversification and growth potential. With disciplined investing and regular reviews, achieving your Rs 1.5 crore goal in 10 years is realistic. Consider consulting a Certified Financial Planner for tailored advice and ongoing support.
Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
