I am 33 year old , monthly salary 1 lac, I have 8 lac In MF till date invested in ( hdfc mid cap - 1500, hdfc small cap - 1500, hdfc index fund - 1500, Dsp black rock tax saver - 2000, Kotak gold fund - 1000,ICICI opportunity fund- 2000, edielwiess debt fund- 1000), also I have opened wife portfolio where ( sbi index fund- 1000, quant small cap - 1000 monthly SIPs), total SIP amnt is 12500, wife is housewife. I have ppf 1.30lac, NPS- 1.32lac, PF balance - 5lac. I have 3 year old son, pls suggest how it more can be efficient and what I want to have around 2 cr at the age of 50
Ans: Evaluating Your Current Investments
You currently have a diversified portfolio across mutual funds, PPF, NPS, and PF. Here’s an analysis of your situation:
Mutual Fund Investments
Current Allocation:
HDFC Mid Cap Fund
HDFC Small Cap Fund
HDFC Index Fund
DSP BlackRock Tax Saver
Kotak Gold Fund
ICICI Opportunity Fund
Edelweiss Debt Fund
Considerations:
Diversification:
You have a good mix of mid-cap, small-cap, index, and debt funds. This diversification helps manage risk.
Index Funds:
While index funds offer broad market exposure, they might not always outperform actively managed funds, especially in volatile markets.
Gold Funds:
Kotak Gold Fund can be a good hedge against inflation but keep the allocation minimal.
Tax Savings:
DSP BlackRock Tax Saver is useful for tax benefits under Section 80C.
Wife’s Portfolio
Current Allocation:
SBI Index Fund
Quant Small Cap Fund
Considerations:
Index Fund:
As noted earlier, index funds offer broad exposure but may lack the potential for higher returns compared to actively managed funds.
Small Cap Fund:
A good choice for potentially higher returns but comes with increased risk.
Asset Allocation Strategy
Investment Efficiency
Review SIP Amounts:
Your current SIP total is Rs. 12,500. To reach your goal of Rs. 2 crores by age 50, consider increasing your SIPs.
Current Mutual Fund Distribution:
You might want to balance between equity and debt based on your risk tolerance and investment horizon.
Rebalance Portfolio:
Review performance annually. If any fund consistently underperforms, consider reallocating or switching.
PPF, NPS, and PF
PPF:
Continue contributing to PPF for tax benefits and a safe return. It's a good long-term investment.
NPS:
NPS is a good option for retirement savings with tax benefits. Ensure you're contributing regularly.
PF:
PF is a stable investment with guaranteed returns. Maintain contributions as it provides a safety net.
Achieving Your Goal of Rs. 2 Crores by Age 50
Increase SIP Amount:
To achieve Rs. 2 crores, you might need to increase your SIP amount. This depends on the returns you expect from your investments.
Invest in High-Growth Funds:
Focus on actively managed equity funds with a strong track record. They might offer higher returns compared to index funds.
Emergency Fund:
Ensure you have an emergency fund equivalent to 6-12 months of expenses. This protects against unexpected financial needs.
Final Insights
Reevaluate Investments:
Regularly review your investments and make adjustments based on performance and financial goals.
Consult a Certified Financial Planner:
Consider consulting a Certified Financial Planner for personalized advice and to optimize your investment strategy.
Focus on Long-Term Growth:
Stay committed to your long-term financial goals and avoid making impulsive investment decisions.
By taking these steps, you can efficiently work towards your goal of accumulating Rs. 2 crores by age 50. Regularly assess and adjust your investments to stay on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
