Do you have mutual fund queries?
Please ask your questions here and rediffGURU Dev Ashish, founder, StableInvestor (external link), will answer them.
Bhavaniprasad: I am an engineer by profession and my age is 34 years as of now.
I want to retire at 55 years by accumulating sufficient money. In today’s terms it could be Rs 1.50 crores.
What amount is required to retire after 21 years?
Now I have Rs 1 lakh premium policy in LIC of India and SIP of Rs 1,000 per month in SBI Small Cap Fund.
Please suggest a way out.
You have already decided on the target corpus in today’s value at Rs 1.5 crore. So now, if the same figure provided by you is inflation-adjusted at 6 per cent (assumed average inflation) for the next 21 years, the figure comes to Rs 5.1 crore in future value.
To reach this corpus, one needs to invest about Rs 51-52,000 per month (Rs 6.1+ lakh per year) at an average return of 9 per cent per annum. This monthly/annual investment amount needs to increase by at least 5 per cent every year in line with the increase in your salary.
Currently, you are investing Rs 1 lakh in LIC traditional plans which can give returns of 5-6 per cent. Equity funds can give 10-11 per cent average returns in the long run.
So, to reach the target corpus, you need to increase the investments in line with what has been suggested.
Rajesh: Hi Dev, good day.
I am planning to start SIPs (Rs 55K per month) in the following mutual funds for a horizon of 5-7 years to create Rs 1 crore corpus.
Could you please review and suggest if they look fine or need any changes/alternate funds? I am fine to take higher risks.
1. Quant Small Cap Fund Direct Plan Growth — Rs 3,000
2. Nippon India Small Cap Fund Direct Growth — Rs 2,500
3. HDFC Small Cap Fund Direct Growth — Rs 2,500
4. Canara Robeco Small Cap Fund Direct Growth — Rs 3,000
5. Quant Mid Cap Fund Direct Growth — Rs 3,000
6. Motilal Oswal Midcap Fund Direct Growth — Rs 2,000
7. HDFC Mid Cap Opportunities Direct Plan Growth — Rs 3,000
8. Quant Infrastructure Fund Direct — Rs 3,000
9. Quant Flexi Cap Fund Direct Growth — Rs 3,000
10. Parag Parikh Flexi Cap Fund Direct Growth — Rs 6,000
11. HDFC Flexi Cap Direct Plan Growth — Rs 5,000
12. ICICI Prudential Technology Direct Plan Growth — Rs 3,000
13. HDFC Retirement Savings Fund Equity Plan Direct Growth — Rs 5,000
14. HDFC Balanced Advantage Fund Direct Plan Growth — Rs 2,500
15. UTI Nifty200 Momentum 30 Index Fund Direct Growth — Rs 2,500
16. Bandhan Nifty 50 Index Fund Direct Plan Growth — Rs 3,000
17. Nippon India Growth Fund Direct Growth — Rs 5,000
You have chosen an unnecessarily large number (17) of funds to invest Rs 55,000 monthly.
If you combine the underlying stock portfolio of all these funds, then you would have hundreds of stocks and be running effectively a Nifty500 kind of portfolio.
There is no need to complicate it. In my view, just having 3-4 funds would be more than enough for your requirements.
Assuming you have at least a moderately aggressive risk appetite, you can invest Rs 10-15k in one large cap index fund, Rs 15-20k in one flexi-cap/large and mid-cap fund, Rs 10k in one mid-cap fund and the remaining in a small cap fund.
This allocation enough will be more than enough for your portfolio requirements.
Rahul: Sir I change my portfolio, now I have Parag Parikh Flexicap, SBI Mid Cap and Axis Small Cap funds, each with Rs 5,000; total Rs 15,000 per month sip for 25 years and 10 percent step up every year.
I want Rs 5 crores for my retirement.
Is this portfolio good?
Your plan seems to be reasonable to achieve your target of Rs 5 crores in 25 years.
But given that the total allocation of mid-small caps (ie non-large caps) will be more than 50 per cent in this portfolio, it must be understood that this is a portfolio suitable for a sufficiently high-risk appetite.
If this is in line with what your understanding is then it is fine; else, consider increasing allocation to large caps as well.
Rudolf: Dear Dev, first of all, thank you for taking the time to review questions from viewers. Your efforts are truly appreciated from the bottom of my heart.
I would be really grateful if you could review my investment portfolio.
I invest Rs 64,000 every month in direct mutual funds and my plan is to continue this for the next 10 years. These are:
ICICI Pru Bluechip — Rs 12,000
Mirae Asset Emerging Bluechip — Rs 4,000
Axis Mid-cap — Rs 5,000
HDFC Mid-cap Opp — Rs 5,000
Axis Small-cap — Rs 6,500
Quant Active — Rs 6,500
Parag Parikh Flexi-cap — Rs 8,000
UTI Nifty 50 — Rs 6,000
Navi Nasdaq — Rs 6,000
Tata Digital Industries — Rs 5,000
Please let me know if you see any need for corrections or changes in my portfolio. Thank you.
You don’t need to invest in so many schemes.
There is a lot of overlap in your mutual fund portfolio holdings if you look at each individual scheme’s portfolios.
Just investing the same monthly amount in up to four funds would be more than sufficient.
You can pick one from large cap index fund, 1-2 from a flexi-cap/large and mid-cap fund, 1-2 from mid/small cap funds and that should be sufficient.
In general, most investors are better off avoiding thematic/sectoral funds.
Dipali: Can you suggest a good MF with good returns. Long term and less risk.
If you plan to invest for the long term, then equity funds are suitable vehicles to participate in equity returns.
The idea of less risk does not clearly specify your risk appetite but if you want to go for pure equity funds, then choose from large cap/flexi-cap funds and if you want a comparatively safer (with some debt allocation in addition to equity), then you can consider aggressive hybrid funds as well.
rediffGURU Dev Ashish‘s personal disclaimer: As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. The views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.
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